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Illumina Shares Skyrocketed: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Illumina (Nasdaq: ILMN  ) soared a whopping 42% on Wednesday after Swiss drug giant Roche Holding made a hostile $5.7 billion bid for the genetic-analysis specialist.

So what: While the offer represents just an 18% premium over Illumina's closing price on Tuesday, it's about 65% higher than it was in December when rumors first started swirling about Roche's interest. Roche is making the move to boost its presence in the growing diagnostics business, but given that Illumina shares are soaring about 20% past the bid, it will likely need to make a higher offer to make it happen.

Now what: When you make 40% in one morning, taking at least some dough off the table seems like the prudent thing to do. While a higher bid from Roche or another large player is likely, holding out for a dramatically better offer seems a bit risky. Given Illumina's heavy reliance on dwindling government grants, this seems like an opportune time to lighten up the position.

Interested in more info on Illumina? Add it to your watchlist.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of Illumina. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.


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10/20/2016 4:00 PM
ILMN $142.83 Down -3.89 -2.65%
Illumina CAPS Rating: *****