Illumina Trading Higher After Raising Guidance

Nasdaq-100 component Illumina Inc. (ILMN) is trading higher by more than 8% on Tuesday morning after guiding Q1 and fiscal year 2021 revenues above consensus. The company, a world leader in genetic and genomic analysis valued at nearly $61 billion, now expects to post first quarter revenue of $1.085 billion compared to $925 million prior estimates. In addition, full year revenue should grow between 25% and 28% to $4.05 billion, higher than prior $3.91 billion consensus.

FTC Seeking to Block Key Acquisition

The stock fell to a two-month low at the end of March after the U.S Federal Trade Commission (FTC) filed an administrative complaint and authorized a federal court lawsuit seeking to block Illumina’s proposed acquisition of cancer detection test maker Grail. The government is alleging the acquisition will reduce competition and innovation for multi-cancer early detection tests, potentially raising consumer prices.

Illumina added a bullish note to the new guidance, proclaiming “Our core business is exceptionally strong and growing ahead of our expectations. We are seeing broad-based acceleration across our core clinical and research applications as more patients, physicians and researchers than ever access the benefits of next generation sequencing. In addition, we are experiencing increased demand for COVID surveillance globally due to the critical role that Illumina’s next generation sequencing technology plays in the fight against this pandemic.”

Mixed Wall Street and Technical Outlook

Wall Street consensus was cautious ahead of the pre-announcement, with a ‘Hold’ rating based upon 6 ‘Buy’, 9 ‘Hold’, and 1 ‘Underweight’ recommendation. More importantly, four analysts recommend that shareholders close positions and move to the sidelines. Price targets currently range from a low of $275 to a Street-high $570 while the stock opened Tuesday’s session nearly $50 above the median $390 target.

Illumina failed a breakout above 2019 resistance near 380 in July 2020 and fell more than 100 points into September. It retuned to the prior high in January 2021 and took off in a momentum-fueled advance that posted an all-time high at 556 in February. Price shed nearly 200 points into late March and bounced at the 50-week moving average. A monthly sell cycle remains in firmly place despite the turnaround, predicting mixed action though the first half of the second quarter.

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Disclosure: the author held no positions in aforementioned securities at the time of publication.