Illumina Q3 Earnings: Can NasdaqGS:ILMN Hit Its $0.80 EPS Target?

in EARNINGS/INVESTING IDEAS by

Illumina, Inc. (NasdaqGS:ILMN) is scheduled to report Q3 earnings results on October 29, 2020.

The company is expected to report earnings of $0.80/share on revenue of $714 million. The consensus earnings per share (EPS) of $0.80/share is based on a poll of 17 analysts and represents a decline in eps of −58.4% over the same quarter last year, when the company reported earnings of $1.93/share.

The revenue forecast of $714 million based on a poll of 15 analysts implies a year-over-year (YoY) decline in revenue of −21.3%. Last year the company reported $907 million in revenue for the quarter.

Expected to report EPS contraction of −58.4% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $713.97 $907.00 −21.3%
EPS $0.80 $1.93 −58.4%

Earnings Call Trends

Historically, management has exceeded analyst expectations 6 out of the last 8 tracked quarters, and missed expectations 2 quarters.

What are your expectations from Illumina, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.67 $0.62 −7.4% Missed
Q1, 2020 $1.25 $1.64 31.2% Beat
Q4, 2019 $1.58 $1.70 7.4% Beat
Q3, 2019 $1.41 $1.93 37.3% Beat
Q2, 2019 $1.34 $1.35 1.1% Beat
Q1, 2019 $1.35 $1.60 18.6% Beat
Q4, 2018 $1.36 $1.32 −2.8% Missed
Q3, 2018 $1.26 $1.52 20.7% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 28, 2020, the stock price reacted by falling −11.2%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 6, 2020 $400.74 $355.66 −11.2% Decline
April 30, 2020 $317.45 $305.88 −3.6% Decline
January 29, 2020 $314.28 $296 −5.8% Decline
October 24, 2019 $312.59 $290.64 −7.0% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −3.00, the model suggests that the company is not likely to be an earnings manipulator. A value of −3.00 implies a 0.1% chance of earnings manipulation.

Fundamentals And Technical Analysis

Illumina, Inc. is currently trading at $319.06/share, down −1.4% for the day. The company is trading at approximately 78.9% of its 52-week high of $404.20/share. The company’s stock price is down −10.3% since the last earnings report and down −0.4% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 42.62 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGS:ILMN Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 67.38 and a forward P/E multiple of 69.90.

Illumina, Inc.’s current share price also implies a price-to-book (P/B) multiple of 10.23. The following table summarizes some other key fundamental ratios:

Data as of October 27, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 28, 2020
Stock Price (Current) $319.06
P/E Ratio 67.4x
P/E Ratio (Fwd) 69.9x
PEG Ratio −2.7
Total Debt / Total Capital 3.8%
Levered Free Cash Flow $1.046 billion
EV / EBITDA 38.2x

Finbox

Illumina, Inc. is a large-cap stock with a market capitalization of $46.698 billion and a total enterprise value of $45.321 billion. The company operates in the Healthcare sector and the Life Sciences Tools & Services industry.

Illumina, Inc. provides sequencing and array-based solutions for genetic and genomic analysis. Its products and services serve customers in a range of markets enabling the adoption of genomic solutions in research and clinical settings for applications in the life sciences, oncology, reproductive health, agriculture and other emerging segments. The company provides instruments and consumables used in genetic analysis; and genotyping and sequencing services, instrument service contracts, and development and licensing agreements. Its customers include genomic research centers, academic institutions, government laboratories, and hospitals, as well as pharmaceutical, biotechnology, commercial molecular diagnostic laboratories, and consumer genomics companies. The company markets and distributes its products directly to customers in North America, Europe, Latin America, and the Asia-Pacific region, as well as sells through life-science distributors in certain markets within Europe, the Asia-Pacific region, Latin America, the Middle East, and Africa. Illumina, Inc. was founded in 1998 and is headquartered in San Diego, California.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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