Buy or Sell Illumina Stock?

Illumina (ILMN) stock has jumped 25% during the past day, and is currently trading at $123.54. We believe there are a few things to fear in ILMN stock given its overall Moderate operating performance and financial condition. This is aligned with the stock’s Moderate valuation because of which we think it is Fairly Priced.

Below is our assessment:

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Let’s get into details of each of the assessed factors but before that, for quick background: With $19 Bil in market cap, Illumina provides sequencing and array-based solutions for genetic and genomic analysis, supporting research and clinical applications globally through direct marketing and distribution.

[1] Valuation Looks Moderate

This table highlights how ILMN is valued vs broader market. For more details see: ILMN Valuation Ratios

[2] Growth Is Very Weak

• Illumina has seen its top line shrink at an average rate of -3.0% over the last 3 years
• Its revenues have fallen -3.3% from $4.4 Bil to $4.3 Bil in the last 12 months
• Also, its quarterly revenues declined -4.8% to $1.1 Bil in the most recent quarter from $1.1 Bil a year ago.

This table highlights how ILMN is growing vs broader market. For more details see: ILMN Revenue Comparison

[3] Profitability Appears Strong

• ILMN last 12 month operating income was $824 Mil representing operating margin of 19.2%
• With cash flow margin of 26.9%, it generated nearly $1.2 Bil in operating cash flow over this period
• For the same period, ILMN generated nearly $1.3 Bil in net income, suggesting net margin of about 29.4%

This table highlights how ILMN profitability vs broader market. For more details see: ILMN Operating Income Comparison

[4] Financial Stability Looks Very Strong

• ILMN Debt was $2.6 Bil at the end of the most recent quarter, while its current Market Cap is $19 Bil. This implies Debt-to-Equity Ratio of 13.4%
• ILMN Cash (including cash equivalents) makes up $1.2 Bil of $6.1 Bil in total Assets. This yields a Cash-to-Assets Ratio of 19.0%

[5] Downturn Resilience Is Moderate

ILMN saw an impact slightly better than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• ILMN stock fell 82.3% from a high of $510.06 on 16 August 2021 to $90.18 on 13 November 2023 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• The stock is yet to recover to its pre-Crisis high
• The highest the stock has reached since then is $155.15 on 7 November 2024 , and currently trades at $123.54

 
2020 Covid Pandemic

• ILMN stock fell 37.7% from a high of $326.08 on 10 January 2020 to $203.31 on 18 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 18 May 2020

 
2008 Global Financial Crisis

• ILMN stock fell 57.8% from a high of $45.72 on 15 August 2008 to $19.27 on 21 November 2008 vs. a peak-to-trough decline of 56.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 6 August 2010

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read ILMN Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

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