Illumina shares tumbled on Friday after the DNA sequencing tool slowed Wall Street’s quarterly forecast and lowered its outlook for the year.
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The struggles stem from macro challenges, says Canaccord Genuity analyst Kyle Mikson. Illumination (ILMN). .
For Illumina, customers also stopped expanding lab equipment and were more cautious about stockpiling inventory during the quarter. Illumina also saw a drop in revenue from Covid testing, Mikson said in a report to clients.
“It is important that the company has reduced its guidance range for the whole of 2022, which is driven by the aforementioned factors,” he said.
In the morning, trade on stock market todayIllumina stock fell 9.7% to near 205.30.
Macro Headwinds Slam Illumina Stock
For the June quarter, adjusted Illumina earnings plummeted 70% to 57 cents per share. Earnings also fell short of forecasts of 64 cents, according to FactSet. Revenue came in at $1.16 billion, up 3%, but fell short of projections with $1.22 billion. In constant currency, sales fell 5%.
“Our second quarter fell short of our expectations as challenges in the complex macroeconomic environment more than compensated for the loss of the economy,” CEO Francis deSouza said in a written statement. growth that we continue to see in sequencing runs on our platform.”
Sales of disposable instruments and consumables for running DNA sequencing tests have increased 1% and 6%, respectively, said Illumina analyst Mikson. Powerful shipments of Illumina’s NovaSeq, a DNA sequencing system and interest in cancer tests, boosted the results.
On the second point, revenue from Illumina’s latest cancer test, Galleri, was $12 million. It was a quick stretch, but below expectations, Mikson said. Illumina acquires Galleri, a company that screens for many types of cancer, along with the maker of Grail. The acquisition is still under regulatory scrutiny.
Mikson maintains a buy rating on Illumina stock, but cuts price target to 380 from 450.
Guidance cut amid ongoing challenges
For this year, Illumina expects sales to grow 4%-5%, lower than previous expectations of 14%-16% sales growth this year. That figure could include $50 million to $70 million from Grail. Illumina stock analysts forecast $65 million from Grail. Illumina had previously targeted $70 million to $90 million from Grail.
UBS analyst John Sourbeer said the company also adjusted earnings of $2.75 to $2.90 per share, down from its previous outlook of $4.20 to $4.20 and a call Analysts’ call is $4.11, UBS analyst John Sourbeer said in his note to clients.
Sourbeer has a neutral rating and 350 price target on Illumina stock.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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