Illumina Stock Forecast

Illumina Stock Forecast: As a breakout biotech stock, Illumina gets quite a bit of attention as investors look to benefit from some of the best groundbreaking new developments in genomics and DNA research.

Illumina is a big player in biotechnology. Launched in 1998, Illumina works on a process called “genotyping,” or comparing various DNA for insights. This process has led to massive efficiencies in sequencing a human genome, which is a feather in Illumina’s cap.

Also, in terms of ongoing pathology and other research, it’s important to note that like DNA, viruses and bacteria can also be genotyped, which gives you a broader vision of Illumina’s potential in biotech.

Illumina also works on projects involving gene expression and related genomics, and gets involved in research around proteomics, the study of proteins and their relationship to organisms and development. Looking at cell signaling and other events in the context of molecular and genomic interactions, ILMN builds a knowledge base that helps it to compete in this STEM field.

Is Illumina Stock A Buy?

Looking at the numbers over the past year, Illumina is a buy. Q4 numbers for 2020 were good, and industry insiders were talking about labs reopening after coronavirus restrictions.

It’s also interesting to note that Illumina was among some of the breakout stocks that beat the S&P 500 index returns.

Illumina has been an acquisitive company. ILMN acquired Solexa in 2007 for $650 million, and Epicentre Biotech in 2011. Illumina’s personal full genome sequencing project was unveiled in 2009. All of these served to burnish the appeal of the brand and propel ILMN toward longer term success.

If you look more generally at some of the hot investment opportunities in the market right now, many of them center around biotech stocks of this kind.

For example, you’ll often see innovation plays linked to specialized funds like those operated by ARK Invest, where a general flagship innovation fund ARKK complements other funds like ARKG, which is specifically centered in genomics.

As for specific funds held in ARKG, research on the history of this fund shows Illumina position closed out in November of 2020, but reveals that ARKG was holding significant stock in ILMN.

What this indicates, for a large number of investors, is that larger players are fixing much of their portfolio value, or a significant amount, in biotech stocks that have potential to help redefine medicine and technology in the years to come.

Cathie Wood at ARK Invest in particular focuses her thematic investments on disruptive innovation – companies that can change the world in a meaningfully and often exponential way.

How High Will ILMN Go?

Looking at historic chart numbers, there’s every reason to believe that Illumina might rise. A discounted cash flow analysis projection reveals an upside forecast to $409 per share.

Based on current share price levels that suggest much of the upside in the share price has been factored in already.

Are Insiders Selling Illumina Shares?

Despite all of the positives around this stock, there are some warning signs around Illumina for anybody including it in their biotech stocks list.

First, there is the big picture in terms of current acquisitions – unlike some of the past acquisitions mentioned above, the company’s bid for Pacific Biosciences has been unsuccessful, as has its attempts to acquire Grail, which is working on cancer detection technologies.

In the case of PacBio, it was regulator concerns around the neophyte nature of the smaller company that have led to obstacles on that deal.

Rumors of ILMN share selling by insiders have also created some amount of consternation around those looking to assess this stock for its short-term potential.

Despite the risks, though, those who look more at technicals might see past those challenges, and perhaps discount narratives around individuals selling stock, where those sales might occur for many different reasons.

Is Thermo Fisher Beating Illumina?

To get a better idea of how Illumina stands out in its field, it’s useful to look at a list of big competitors. Firms like Thermo Fisher, Agilent, and Mettler-Toledo all have more buy ratings than ILMN, and many of them have provided better returns at one time or another.

On the other hand, competitors like Waters, which is smaller than Illumina, has seen ILMN beat it in some of these areas.

Detailed analysis shows that ILMN competitors do have their own legacies, and that to some extent, ILMN does not have, in the parlance of Warren Buffett, a “moat” around its operations (proprietary genomics notwithstanding).

Illumina Stock Forecast: Bottom Line

Illumina is a genomics powerhouse that is in the right place at the right time but arguably lacks a moat as strong as its competitors.

From a pure financial perspective analyzing its financial statements, ILMN share price can reach close to $410 per share if management executes well on its vision.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.