Durable Goods (Jun F) -9.4% vs 9.3% Prior, Ex-Trans 0.2% vs 0.2%
Tuesday, Canaccord Genuity maintained a Hold rating on Illumina stock (NASDAQ:ILMN) but lowered the price target to $115 from $135, as the stock trades near $86.62, down over 35% year-to-date. The adjustment followed Illumina’s announcement on the previous day regarding restrictions imposed by the China Ministry of Commerce (MOFCOM). The company is now prohibited from exporting sequencing instruments to China, prompting a revision of its financial outlook. According to InvestingPro data, 12 analysts have recently revised their earnings estimates downward, reflecting growing concerns about the company’s near-term prospects.
Illumina responded to the March 4 notice from MOFCOM by revising its 2025 non-GAAP diluted earnings per share (EPS) guidance downwards to approximately $4.50, from the previous range of $4.50-4.65. This change reflects the anticipated impact of the inability to continue sales in the Chinese market. The company, which generated revenue of $4.37 billion in the last twelve months, maintains a Fair financial health rating according to InvestingPro’s comprehensive analysis, with particularly strong scores in cash flow management.
In an effort to mitigate the financial effects of the export ban, Illumina has initiated a cost reduction program aimed at saving around $100 million for the fiscal year 2025. The cost-cutting measures are expected to partially counterbalance the loss of revenue resulting from the restrictions in China. Despite current challenges, InvestingPro analysis indicates that net income is expected to grow this year, with analysts projecting a return to profitability after recent losses. Get access to over 30 additional key insights and metrics for Illumina with an InvestingPro subscription.
Canaccord Genuity’s analysis suggests that the issues in China could represent an approximate $0.70 detriment to the midpoint of Illumina’s prior 2025 non-GAAP EPS guidance range, excluding the effects of the announced cost-saving initiatives. Despite this setback, Illumina plans to focus on driving its revenue growth to high single digits by the year 2027, leveraging its comprehensive portfolio of multiomic technologies and workflows.
While Illumina remains optimistic about its ability to reaccelerate revenue growth in the long term, Canaccord Genuity prefers to wait for evidence of sustained solid performance before altering its stance on the stock. The company’s strategic plans and technological advancements are aimed at achieving this growth despite the current challenges in the Chinese market.
In other recent news, Illumina has projected a non-GAAP earnings per share (EPS) of $4.50 for the fiscal year 2025. This comes amid a significant challenge posed by the China Ministry of Commerce’s ban on the export of Illumina’s sequencing instruments to China. In response, Illumina is implementing a cost reduction program valued at approximately $100 million to mitigate potential revenue and operating income losses from its Greater China business. Meanwhile, Baird has adjusted its financial model for Illumina, cutting the stock price target to $90 from $127, due to the regulatory developments in China and other market uncertainties.
Canaccord Genuity has maintained a Hold rating on Illumina with a price target of $135, expressing skepticism about the impact of the company’s new product launches in overcoming current challenges. Barclays (LON:BARC) reiterated an Underweight rating with a $100 target, noting that Illumina might need to revise its guidance in light of the new export ban. Despite these challenges, Evercore ISI has maintained an Outperform rating with a $160 target, suggesting confidence in Illumina’s ability to stabilize and adjust its financial strategies. These recent developments highlight the varied perspectives among analysts regarding Illumina’s future performance amid current geopolitical and market challenges.
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