Illumina shares slump on weaker than forecast 2023 profit guidance

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By Sam Boughedda

Illumina (NASDAQ:ILMN) shares slumped Tuesday after the gene-sequencing equipment maker revealed it expects earnings per share in 2023 to be between $1.25 and $1.50, below analyst consensus expectations.

In addition, the company said in a presentation that it sees 2023 revenue from $4.9 billion to $5.03B. The analyst consensus forecast was for earnings per share of $2.99 on revenue of $5B.

Illumina shares are currently down 4.8% after falling as much as 15% in the immediate aftermath of the presentation.

Following the news, Cowen analysts, who have an Outperform rating on Illumina, and lowered the firm's price target on the stock to $296, said that "after a number of disappointing qtrs & guidance cuts, on top of the unpopular GRAIL deal, investor confidence is shaken."

"We view the guide as de-risked with the stock at an attractive entry ahead of the X cycle, though improved qtrly execution is needed to restore confidence."

Meanwhile, Citi analysts, who reiterated a Sell rating and $180 price target on Illumina, said they remain focused on the deteriorating earnings power in the Illumina model, and with the "EPS guide well below investor expectations," they expect the first half of 2023 to be particularly soft.

However, RBC Capital took a different stance, with analysts stating the pre-announcement "creates a buying opportunity."

"We view the 10-15% after-hours sell off as a buying opportunity, and we are making no change to our $282 price target. While we are disappointed in initial FY'23 EPS guide, we are encouraged by the growth trajectory exiting FY'23. We also believe there are multiple ways to unlock shareholder value at ILM," they said in their research note.

Finally, Baird analysts took a more neutral tone. They said in a research note that Illumina "previewed 4Q revenue slightly above the high end of guidance," but while the high end of 2023 revenue growth guidance was in line with Baird's model, "the EPS outlook was well below us/Street."

"We think resolution of the potential GRAIL divestment could get shares working again, but are staying on the sidelines given the uncertain path forward," they added.