On Tuesday, Piper Sandler maintained a positive outlook on Illumina, Inc. (NASDAQ: NASDAQ:ILMN), reiterating an Overweight rating with a $200.00 price target. The firm expressed a bullish stance ahead of the company's upcoming strategy day on August 13.
Piper Sandler's analyst expectations are set for Illumina to present a long-range plan (LRP) with achievable mid-to-high single-digit revenue growth and earnings per share (EPS) above $4. This forecast is anticipated to attract more growth at a reasonable price (GARP) and value investors to the stock.
According to Piper Sandler analyst, there is potential for Illumina to occasionally achieve low double-digit growth years and regain a credibility premium in its stock price. The firm suggests that the current risk associated with Illumina's stock is moderated by the proximity of the strategy day. However, the primary focus is expected to be on the EPS figure, with Illumina likely needing to guide around an approximate $4 EPS.
The analysis predicts that Illumina could accelerate its earnings growth from this base if it can sustain revenue growth and improve its tax rate. Furthermore, Piper Sandler anticipates that Illumina could achieve a mid-20% operating margin while maintaining a mid-to-high single-digit growth rate.
InvestingPro Insights
As Illumina, Inc. (NASDAQ:ILMN) prepares for its strategy day, real-time data from InvestingPro offers a snapshot of the company's current financial health. With a revenue of $4.493 billion over the last twelve months as of Q1 2024, Illumina demonstrates a moderate revenue growth of 1.01%. Despite a slight quarterly decline in revenue growth of -1.01%, the company maintains a strong gross profit margin of 65.72%. However, it's important to note that Illumina has reported an adjusted operating income of -$88 million, indicating challenges in translating top-line growth to the bottom line within the same period.
From an investment standpoint, Illumina's stock has seen a strong return over the last month with a 16.46% price total return, highlighting a recent upturn in investor sentiment. Yet, the company has experienced a significant 35.0% decline in its one-year price total return, underscoring the importance of the upcoming strategy day in potentially reversing this trend. An InvestingPro Tip points out that Illumina does not pay a dividend, which may influence the investment decisions of income-focused shareholders. Furthermore, with four analysts having revised their earnings upwards for the upcoming period, there is a sense of optimism that Illumina could indeed present a compelling case for growth and profitability during its strategy day.
For investors seeking more detailed analysis and additional InvestingPro Tips, they can explore further insights on Illumina, including the fact that the company operates with a moderate level of debt and is expected to become profitable this year. There are in total 7 additional InvestingPro Tips available that could provide a deeper understanding of Illumina's financial position and future prospects. Interested readers can take advantage of a special offer using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, helping them stay ahead with comprehensive financial analysis and investment strategies.
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