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Investing.com -- Illumina (NASDAQ:ILMN) stock declined 3.8% Wednesday after Citi downgraded the genomic sequencing company to Sell from Neutral, citing concerns about its second-half outlook.
Analyst Patrick Donnelly lowered his price target to $80 from $85, representing nearly 20% downside from Tuesday’s closing price of $99.27. The downgrade comes ahead of Illumina’s upcoming quarterly earnings report.
While Donnelly expects Illumina to report in-line second-quarter results, he expressed skepticism about the company’s ability to meet its second-half forecasts. The analyst pointed to challenges in ramping up consumables sales amid a softer academic backdrop and difficulties in the Chinese market.
"We are cautious into the print as we see risk to the stock if they cut the guide (for EPS this would be the third time this year) with numbers risk presenting itself if they do not cut the guide (with the view that 2H risk remains)," Donnelly wrote in his note to clients.
The analyst’s concerns highlight a potential lose-lose scenario for Illumina - either cutting guidance again, which would mark the third earnings per share reduction this year, or maintaining guidance that might prove difficult to achieve given current market conditions.
Illumina, which specializes in DNA sequencing and array-based technologies, has faced headwinds in recent quarters as research institutions and other customers have tightened spending.
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