William Blair Maintains Outperform On Illumina Following Investor Meeting With Management

In a research report issued today, William Blair analyst Amanda Murphy reiterated an Outperform rating on Illumina (ILMN) with a $200 fair value, following recent investor meeting with CEO Jay Flatley, CFO Marc Stapley, and Senior Director of Investor Relations Rebecca Chambers.

Murphy noted, “The primary focus was on clinical applications of the company’s platforms, particularly its efforts to facilitate development and adoption of NGS-based clinical tools including establishment of clinical NGS standards, develop universal NGS-based mutation cancer panels in collaboration with pharma, and increase dialogue with the FDA and payers. the company is making a big push from a regulatory perspective to build its interface with the FDA, as evidenced by its recent acquisition of Myraqa, which is well known for its expertise in FDA submissions (and worked with Illumina on its MiSeq FDA submission). Management reiterated its goal to submit the HiSeq 2500 to the FDA by the end of the year (perhaps with its Verinata NIPT assay or potential as an analytical-only platform).”

The analyst added, “The stock is trading at 12.5 times 2015 revenue and 63.5 times on a P/E basis on 2015, which is well above the average of 6.2 times revenue and 40.3 times earnings. Illumina is the clear leader in a massive market (with a well-defined $20 billion total addressable market) and recent results point to meaningful demand across its full suite of products; therefore, we maintain our Outperform rating. We see meaningful upside to estimates over the next couple of quarters (discussed in more detail below); however, a stock price close to $200 would suggest these expectations are at least to some degree priced in and thus, we would wait for pull-backs in the name to accumulate shares.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Amanda Murphy has a total average return of 1.2% and a 60.0% success rate. Murphy has a 1.0% average return when recommending ILMN, and is ranked #2341 out of 3270 analysts.

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