Will This Upgrade Help Illumina (ILMN) Stock Today?

NEW YORK (TheStreet) -- Illumina  (ILMN) was upgraded to "outperform" from "neutral" by Macquarie Group on Wednesday.

The firm raised the company's price target to $170 from $125.

Illumina shares were up 2.0% to $159.05 in early trading Wednesday.

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Macquarie sees Illumina as the top dog in DNA sequencing and doesn't see any competition for that distinction in the near term.

"ILMN is the leading player in the DNA sequencing market and we see little in the way of competitive threats that is likely to alter its position." Macquarie said. "ILMN is a growth and momentum stock and, as such, carries greater risks; however, we think that investors are likely to continue to pay a premium for its current and future growth potential."

TheStreet Ratings team rates ILLUMINA INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate ILLUMINA INC (ILMN) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 13.2%. Since the same quarter one year prior, revenues rose by 25.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The current debt-to-equity ratio, 0.57, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 4.36, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for ILLUMINA INC is currently very high, coming in at 75.47%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 20.82% significantly outperformed against the industry average.
  • Net operating cash flow has significantly increased by 60.80% to $126.84 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 18.34%.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 164.85% over the past year, a rise that has exceeded that of the S&P 500 Index. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • You can view the full analysis from the report here: ILMN Ratings Report
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