Illumina‘s (ILMN) earnings outlook completely missed Wall Street’s expectations late Wednesday, causing ILMN stock to dive in late action.
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The company is a leader in using next-generation sequencing to “read” the human genome, a key technology as genetic and precision medicines gain steam. But for the year, Illumina expects to earn just 75 cents to 90 cents per share, minus some items. That widely missed forecasts for adjusted profits of $1.27 per share, according to FactSet.
RBC Capital Markets analyst Conor McNamara noted the “weakening biotech and pharma funding environment.” Many of Illumina’s customers are biopharma companies.
In the second half of the year, interim Chief Executive Charles Dadswell said he expects revenue to be “negatively impacted” due to more cautious purchasing patterns, a slower recovery in China and a drop in the sales of consumables as customers transition to Illumina’s new system, NovaSeq X.
In after-hours trading on the stock market today, ILMN stock skidded 6.2% near 173.
ILMN Stock: Sales, Earnings Beat Forecasts
During the second quarter, Illumina’s sales climbed 1% to $1.18 billion and beat forecasts for $1.16 billion, according to FactSet. Excluding the impact of exchange rates, sales rose 3%.
The company also earned 32 cents per share, minus some items. Though earnings fell 44% year over year, they beat predictions for just a 2-cent gain per share.
Illumina splits its business into two segments: core Illumina and Grail. The company acquired Grail for $7.1 billion in 2021 over objections from regulators. Now, Illumina is fighting a legal battle to retain ownership of Grail. In the June quarter, Grail sales nearly doubled to $22 million, while core Illumina sales were flat at $1.16 billion.
Illumina cut its outlook for the year and now expects revenue from the two divisions to inch up 1%. Previously, Illumina expected 7%-10% consolidated revenue growth this year. ILMN stock analysts called for nearly $4.9 billion in full-year sales, an increase of 1%.
The company also lowered its adjusted earnings outlook by 55 cents at the midpoint.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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