Illumina, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

Investors in Illumina, Inc. (NASDAQ:ILMN) had a good week, as its shares rose 4.3% to close at US$81.57 following the release of its quarterly results. It looks like a credible result overall - although revenues of US$1.0b were what the analysts expected, Illumina surprised by delivering a (statutory) profit of US$0.82 per share, an impressive 24% above what was forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Illumina after the latest results.

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Following the recent earnings report, the consensus from 20 analysts covering Illumina is for revenues of US$4.23b in 2025. This implies a noticeable 2.4% decline in revenue compared to the last 12 months. Illumina is also expected to turn profitable, with statutory earnings of US$3.22 per share. Before this earnings report, the analysts had been forecasting revenues of US$4.29b and earnings per share (EPS) of US$3.60 in 2025. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a real cut to EPS estimates.

See our latest analysis for Illumina

The average price target fell 5.6% to US$109, with reduced earnings forecasts clearly tied to a lower valuation estimate. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Illumina, with the most bullish analyst valuing it at US$190 and the most bearish at US$70.00 per share. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 3.2% by the end of 2025. This indicates a significant reduction from annual growth of 5.4% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 6.0% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Illumina is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Illumina's future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on Illumina. Long-term earnings power is much more important than next year's profits. We have forecasts for Illumina going out to 2027, and you can see them free on our platform here.

You can also see whether Illumina is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.