Update-1 http://flyingsquidstudios.com/files/Noirnt_101.html Biotechs Sinking Again …IBB down 2.48%, ILMN down another 2%
Related sequencing stocks: FMI down 1.75%, PACB flat at $8.40
Illumina (ILMN) shares crashed 25% to $139, after a warning on third quarter sales . The global leader in DNA sequencing systems warned that revenues missed forecast and would be $607M, well short of earlier guidance of $625-$630M. High through-put sequencing machine revenues fell 26% Q over Q and revenue forecasts were weak for Q4, causing concern for overall market growth of higher end sequencing machines. The stock was trading at high multiples possibly due to continuing rumors of a buyout, but several analysts had already downgraded the stock in July and August but it is still expensive with a PE of 47.60, a PEG of 20.42 and a P/S of 8.83. Revenue estimates for 2016 are in the $2.4B range and growth is still expected at 13% for 2017 to $2.6B .Nonetheless DNA sequencing is a major tool for understanding the molecular basis of disease and Illumina along with Roche ADR (RHHBY) and ThermoFisher (TMO) are the leaders. Expect more M&A talk in the future because Illumina (ILMN) is a lot cheaper with a $20.4B market cap.
ILMN is a volatile stock and now http://hitsharesquare.com/activity/p/112014/ at a triple bottom within 12 months!
Keep in mind that ILMN is a molecular “tools” stock and not a drug stock.
We wrote several articles in the past about Next Gen Sequencing (NGS) as well as other players including Pacific Biosciences (PACB) and clearly NGS is a major tool for drug development and understanding the genetic basis for disease. Among the key issues going forward are the growth rates for the sequencing market which is currently well served and the next leg up with new applications in clinical diagnostics. We recently recommended Foundation Medicine (FMI) a laboratory service which provides physicians with genomic profiles that complements traditional cancer treatment decision tools.
The IBB fell 3.84% to $277 because of large 4.29% holdings of ILMN. Intermediate support for two months have been at $280. The equal weighted XBI fell 3.17%.
The healthcare sector remains among the weakest YTD and the XLV dropped 2.5% to $70.39 falling below support at $72.
Most other ‘tools” stocks were weak today including : A down 4.23%, FMI down 4.39%, PACB down 7.29%, QGEN down 4.1%, TMO down 2.65%.
Risk remains off.