Opportunities galore. That's the current status of the stock market as a result of the massive market meltdown caused by the coronavirus pandemic.

Of course, not every stock that has plunged is a buy. Investors need to examine the pros and cons of any stock before scooping up shares, even if the stock appears to be more attractively valued than it's been in a long time.

Illumina (ILMN 1.23%) is one of those stocks that now trade well below the highs from earlier this year. But should you buy this gene-sequencing stock during the coronavirus bear market? 

Magnifying glass showing a DNA double helix with a color-coded gene sequence in the background

Image source: Getty Images.

The bull case for Illumina

Granted, Illumina could experience some short-term effects from the coronavirus pandemic. Scientists who are practicing social distancing by staying at home can't run genetic tests in labs. Individuals who have been laid off from their jobs aren't likely to spend money on consumer genomics products. However, because this impact will only be temporary, there's a good argument to be made that this dip in Illumina's share price presents a great buying opportunity.

More importantly, Illumina's long-term prospects remain very good. One ginormous growth driver for the company is in the use of genomic sequencing in cancer research. For example, Illumina's technology is critical in St. Jude Children's Research Hospital's effort to build a database of the genomes of 10,000 pediatric cancer patients and survivors.

An even greater opportunity, though, lies in the use of genomic sequencing on an everyday basis to diagnose cancer in patients and help determine the appropriate therapy for cancer patients. Big drugmakers including Bristol Myers Squibb and Eli Lilly have teamed up with Illumina on companion diagnostics products for their cancer immunotherapies. Illumina and Roche are collaborating on developing in vitro diagnostic tests.

Illumina's technology is also helping significantly in developing treatments for genetic diseases. Huge population genomics efforts in countries across the world use Illumina's systems. In addition, companies such as Centogene rely on Illumina's genomic sequencing systems to help diagnose genetic diseases and work with drugmakers to develop potential cures for those diseases.

Francis deSouza, Illumina's CEO, believes "that this is the decade that genomics becomes available to cancer and genetic disease patients on a mass scale and integrates into standard of care." If you think he's right, Illumina is a great stock to buy for long-term investors.

The bear case against Illumina

Of course, the fact that Illumina could be negatively affected by the COVID-19 outbreak in the next couple of quarters could be viewed as a reason to stay on the sidelines for now. Investors almost always react negatively to disappointing earnings results, and some could be on the way from Illumina.

While that's a short-term argument against investing in Illumina, there's also a major long-term issue for the company. Although Illumina commands a market share of around 70% according to Morningstar, the company faces increasing competition.

Illumina's strength lies in short-read genetic sequencing. For now, this approach claims higher accuracy levels than long-read sequencing methods used by rivals, including Oxford Nanopore and Pacific Biosciences of California. But these newer technologies could make tremendous advances over the next few years and become a more pressing threat to Illumina.

The most glaring knock against Illumina is its valuation. Shares trade at nearly 40 times expected earnings -- and that's after the big drop in the wake of the overall stock market sell-off. Growth stocks like Illumina require picture-perfect execution, something the company hasn't always delivered. 

To buy or not to buy?

I'm not very concerned about the possible short-term effects of the COVID-19 outbreak on the company's business. My view is that the long-term prospects for Illumina remain very good. 

And while I expect competition will increase for Illumina, I think the overall market for genomic sequencing will grow enough to support multiple players. My take is that Illumina's investments in improving its short-read sequencing technology will pay off. At the same time, I'm glad that the company is also investing in internal development of its own long-read sequencing technology.

The long and short of it is (pun fully intended) that Illumina stands as the clear leader in an expanding market and is in an exceptionally strong financial position. That's the kind of stock I think is a smart choice to buy any time, but especially at a discounted price.