Please ensure Javascript is enabled for purposes of website accessibility

Why Illumina, Inc. Soared 25% in January

By Todd Campbell – Feb 6, 2017 at 4:21PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Excitement ahead of the launch of two next-generation gene-sequencing machines sent shares soaring last month.

What happened

Illumina, Inc. (ILMN -1.56%) announced the launch of two new gene-sequencing machines on Jan. 9, and the potential for those sequencing machines to reignite demand caused shares to skyrocket 25% last month, according to S&P Global Market Intelligence.

So what

Illumina's 7,500 gene-sequencing machines are used daily to make new discoveries that are reshaping our understanding of genetics, and paving the way for breakthroughs in medicine.

At the J.P. Morgan Healthcare Conference early in January, Illumina surprised investors by announcing that it will roll out the NovaSeq 5000 and NovaSeq 6000 in 2017. Those two machines include technology that can allow researchers to generate more accurate insight into genes more quickly. Illumina's management also indicated that these two machines could eventually help gene-sequencing costs fall from $1,000 to as little as $100. If so, then these systems could unleash a flurry of genetic research that would otherwise remain sidelined because of its cost.

A man sits against a wall with money falling down beside him and a piggy bank.


Now what

Historically, launching new gene-sequencing machines has boosted Illumina's sales, profit, and share price. It's anyone's guess whether that happens again this time, but I believe it could, and if I'm right, it may cause a re-acceleration in the company's long-term growth.

Last year, Illumina's shares slumped because of order delays in Europe and the U.S. Management said on the fourth-quarter conference call that shifts in ordering patterns will likely create some headwinds again this year. Nevertheless, the company's guidance for 2017 includes expectations of sales growth of 10% to 12% and profit growth of 8%, both compared to last year, and that's still a healthy forecast.

Because Illumina's shares can be bought for less than they cost in 2015, and new products may energize revenue in the future, investors may want to add shares to their growth portfolios while they're arguably on sale.

Todd Campbell has no position in any stocks mentioned. His clients may have positions in the companies mentioned. The Motley Fool owns shares of and recommends Illumina. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Illumina, Inc. Stock Quote
Illumina, Inc.
$190.79 (-1.56%) $-3.02

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/03/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.