Illumina (ILMN) Marked As A Barbarian At The Gate

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Illumina ( ILMN) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Illumina as such a stock due to the following factors:

  • ILMN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $80.2 million.
  • ILMN has traded 520,371 shares today.
  • ILMN traded in a range 212.1% of the normal price range with a price range of $4.70.
  • ILMN traded above its daily resistance level (quality: 530 days, meaning that the stock is crossing a resistance level set by the last 530 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on ILMN:

Illumina, Inc. develops, manufactures, and markets life science tools and integrated systems for the analysis of genetic variation and biological function in North America, Europe, Latin America, the Asia-Pacific, the Middle East, and South Africa. ILMN has a PE ratio of 107.5. Currently there are 9 analysts that rate Illumina a buy, no analysts rate it a sell, and 9 rate it a hold.

The average volume for Illumina has been 1.1 million shares per day over the past 30 days. Illumina has a market cap of $11.5 billion and is part of the health care sector and drugs industry. The stock has a beta of 1.06 and a short float of 26.1% with 28.75 days to cover. Shares are up 64.3% year to date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Illumina as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations, increase in net income, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 7.3%. Since the same quarter one year prior, revenues rose by 24.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • Net operating cash flow has significantly increased by 62.28% to $83.14 million when compared to the same quarter last year. In addition, ILLUMINA INC has also vastly surpassed the industry average cash flow growth rate of 9.36%.
  • ILLUMINA INC reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ILLUMINA INC increased its bottom line by earning $1.13 versus $0.62 in the prior year. This year, the market expects an improvement in earnings ($1.77 versus $1.13).
  • The net income growth from the same quarter one year ago has exceeded that of the Life Sciences Tools & Services industry average, but is less than that of the S&P 500. The net income increased by 5.4% when compared to the same quarter one year prior, going from $29.75 million to $31.36 million.
  • ILMN's debt-to-equity ratio of 0.63 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 3.02 is very high and demonstrates very strong liquidity.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.
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