1. Illumina, Inc. (NASDAQ:ILMN)
Number of Hedge Fund Holders: 55
Illumina, Inc. (NASDAQ:ILMN) is the top company in the genetic sequencing and analysis sub-industry with a market value of $58 billion. The San Diego, California-based company has 7,300 customers, who own 17,000 DNA testing and sequencing machines. The production, selling, and distribution of these machines is only one aspect of the business. Illumina, Inc. (NASDAQ:ILMN) is involved in the disposal of consumables, which is responsible for more than 50% of the top line.
Back in August, Illumina, Inc. (NASDAQ:ILMN) announced the acquisition of GRAIL for $4.5 billion in stock and $3.5 billion in cash. GRAIL is a healthcare company working on the early detection of cancers. However, Illumina, Inc. (NASDAQ:ILMN) will maintain GRAIL as a separate entity until the go-ahead from the European regulators. The Court of Justice of the European (EU) will hear the claims of Illumina challenging the jurisdiction of the European Commission (EC) on the acquisition of GRAIL.
Regarding the acquisition of GRAIL, Kyle Mikson at Canaccord commented on August 31st that although the acquisition will be dilutive for the next several years, it will be net positive for Illumina, Inc. (NASDAQ:ILMN) as there is growth potential in GRAIL. However, the deal will face short-term uncertainty due to opposition from the regulators. The analyst has given a Buy rating to Illumina, Inc. (NASDAQ:ILMN) stock with a price target of $555, reflecting a potential upside of over 49% from the current stock price.
In its Q3 2021 investor letter, Ensemble Capital mentioned Illumina, Inc. (NASDAQ:ILMN). Here’s what the investment management firm said:
“Illumina: While the stock has had quite the turbulent year so far, the company’s fundamentals have been persistently improving as demand for its sequencing instruments and consumables continues to grow in a robust manner with estimated revenue growth over 30% in 2021, after a decline of 9% in 2020. The growth is being spurred by increasing use of sequencing in applications spanning cancer treatment and screening, prenatal testing, population health studies, and tracking new Coronavirus variants. However, its recent acquisition of GRAIL, which Illumina had previously founded and spun out for development, has presented legal challenges from the competition monitoring authorities in the US and EU. GRAIL has recently begun commercializing the only non-invasive 50 cancer screening test leveraging Illumina’s gene sequencing technology which we believe will be immensely beneficial in finding and treating cancers early and will be very valuable for shareholders in the long term given the large market opportunity. Despite the opportunity ahead, the uncertainty around GRAIL caused the stock to sell off by 13% in the third quarter, but the stock is still up 11% for the year.”
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