What happened

Shares of Illumina (NASDAQ:ILMN), a leading manufacturer of genetic testing equipment, rose 18.7% in August, according to data from S&P Global Market Intelligence. Investors can thank solid second-quarter results and bullish guidance for the big jump.

So what

Here's a review of the key takeaways from the company's impressive second quarter:

  • Sales grew 10% to $662 million. This result was well ahead of management's guidance for 7% growth in the top line and it also handily topped the $642 million in revenue that analysts were expecting. Management credited the top-line growth to strong demand for the company's new NovaSeq platform
  • Non-GAAP net income decline by 5% to $121 million or $0.82 per share. Management said that the drop was primarily caused by changes to the way taxes are treated related to stock-based compensation. Thankfully, this number soared past the $0.69 in earnings per share that Wall Street was expecting and also blew past management's guidance.
  • Management tweaked its guidance for 2017. Full-year revenue is now expected to increase by 12%. Non-GAAP EPS guidance was also reaffirmed. 

Given the estimate topping results and bullish revenue guidance, it isn't hard to figure out why shareholders had a great month.

Illumina's headquarters in daylight

Image source: Illumina.

Now what

Illumina CEO Francis deSouza offered up a simple explanation for the strong results, stating, "Interest in the NovaSeq platform exceeded our expectations during the quarter." That news should be music to the ears of investors since it infers that the company is having no problems competing against products made by Pacific Biosciences of California (NASDAQ:PACB). In fact, Pacific Biosciences recently reported a sales dip of nearly 3% in its most recent quarter. While Pacific announced plans to make its Sequel sequencing system more competitive, the company clearly has a lot of work to do if it hopes to successfully compete against the NovaSeq series.

With the NovaSeq series launch still in the very early days, Illumina's business should have the wind at its back for the foreseeable future. While the company's stock is currently priced for prosperity, this bull thinks that there are still plenty of reasons for growth investors to give this stock a hard look.

Brian Feroldi has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Illumina. The Motley Fool recommends Pacific Biosciences of California. The Motley Fool has a disclosure policy.