What happened

Shares of Illumina (NASDAQ:ILMN) were tanking today, down 16% as of 10:27 a.m. EDT, after the genomic sequencing leader announced preliminary results for its second quarter on Thursday evening. Illumina said that it expects to report Q2 revenue of $835 million -- $50 million lower than what Wall Street analysts anticipated.

The company also updated its full-year 2019 guidance. Illumina now projects revenue growth of around 6%, less than half its previous forecast of full-year revenue growth between 13% and 14%. 

Chalk drawing of line going up then erased to show it turning downward

Image source: Getty Images.

So what

Illumina stock is priced at a hefty premium because investors expect strong growth for the company. Any issues that arise for companies with lofty valuations usually cause the shares to sink. And that's what happened with Illumina.

If the factors behind the growth slowing down are only temporary, there's no reason for investors to worry about the pullback. However, if there are more long-lasting issues, it's more concerning.

In Illumina's case, the problems appear to be only temporary. While CEO Francis deSouza expressed disappointment with his company's Q2 results, he said that "our preliminary analysis suggests that these challenges are transitory and do not reflect a macro change to the fundamentals of our business." 

Illumina's revenue miss in Q2 stemmed in large part from a roughly $30 million shortfall in population genomics initiatives. This included what the company referred to as "a sizable sequencing systems and consumables purchase that did not close as expected in the second half of June." However, it still expects this deal to close later in 2019.

The company also said that direct-to-consumer (DTC) revenue was around $10 million lower than expected. Weakness in the DTC market showed up in Illumina's Q1 results as well.

Another $10 million of the revenue shortfall in Q2 came from Illumina's non-high-throughput sequencing systems and consumables. However, the company has stated in the past that this revenue could be "lumpy" at times. 

Now what

DeSouza emphasized that Illumina remains "as enthusiastic about the long-term growth prospects for our markets as we have ever been." There are still good reasons for that enthusiasm, including the potential growth in the use of genomic sequencing in cancer research and treatment.

Illumina's weak Q2 numbers really do look to be only temporary and its long-term prospects really do appear to be strong. Today's decline could present an attractive buying opportunity for investors focused on the long term rather than just the short term.