Illumina
stock was falling sharply Friday after the gene-sequencing company slashed its financial forecasts, prompting analysts to lower their targets for the price.
Shares of
Illumina
(ticker: ILMN) were down 13% to $92.61 and were on pace for their largest percentage decrease since May 2022. The stock was the worst performer in the
S&P 500
Friday and has now dropped 54% this year. It’s on pace for its worst year since 2002.
Illumina said after the close on Thursday that it now expects fiscal 2023 revenue to decrease between 2% and 3% from the prior year. It had previously expected 1% revenue growth. The company now anticipates 2023 earnings of 50 cents to 70 cents a share, down from a previous call for a profit of 75 cents to 90 cents a share.
Illumina also reported third-quarter earnings of 33 cents a share on revenue of $1.12 billion. Analysts surveyed by FactSet were expecting earnings of 14 cents a share from revenue of $1.13 billion.
“The macroeconomic environment remains challenging for our industry and for our customers with customers increasingly cautious and constrained in their purchasing decisions,” Chief Executive Jacob Thaysen said on a call to discuss the results with analysts and investors.
The company also said that it recognized $712 million in goodwill and $109 million in intangible asset impairment related to its Grail business, a cancer-test developer. In October, Illumina received an order from the European Commission to divest Grail, capping a series of regulatory challenges it has faced since announcing its acquisition of Grail in 2021.
“Illumina maintains that the Commission does not have jurisdiction over this acquisition. The company’s jurisdictional challenge remains pending at the European Court of Justice,” the company said in a news release in October. But on the company’s earnings call on Thursday, Thaysen confirmed the divestiture process has begun.
Canaccord Genuity analyst Kyle Mikson downgraded shares of Illumina to Hold from Buy and slashed his price target to $120 from $210 on Friday.
“Although macro headwinds are certainly to blame, we believe the company’s core execution has been subpar in recent quarters/ years. All these issues will likely act as overhangs on the stock for most of 2024,” Mikson said in a research note.
RBC Capital Markets analyst Conor McNamara lowered his price target on the stock to $260 from $318 but maintained his Outperform rating.
“We assume that ILMN can sell Grail for an amount that will cover the EC fine (~$500m) and any capital requirements to keep Grail operations going during a transition,” McNamara wrote.
Write to Angela Palumbo at angela.palumbo@dowjones.com
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