Illumina stock crashed after the company slashed its outlook due to macro pressures building on life sciences tools companies. For the full year, Illumina expects to ship fewer NovaSeq X instruments than previously expected. The slowdown in sales is due to purchasing constraints and lengthened sales cycles causing a decrease in placement expectations, which is concerning after a strong start to the product launch. Illumina stock dropped by 9.3% in afternoon trades following this news.
The NovaSeq X rollout appears to have slowed down significantly, with the company shipping fewer systems in the third quarter than in the second. This has resulted in a dampening of sales despite adjusted earnings beating forecasts. Evercore ISI analyst Vijay Kumar noted that Illumina is not alone in this downward trend and that every tools company has guided for a flat to low single-digit outlook for the fiscal year 2024. Despite this, he cut his price target on Illumina stock to 160 from 180, but still has an outperform rating.
In addition to the slowdown in the NovaSeq X rollout, Illumina is facing continued challenges with its Grail acquisition, with European regulators ordering the company to divest Grail. This adds to the uncertainty of Illumina’s return to growth, leading analysts to lower their price targets on the stock. Despite concerns, analysts still believe that DNA sequencing will be a core part of biopharma research in the future and that Illumina should maintain a dominant market position.
Illumina stock crash was caused by the company slashing its outlook due to macro pressures on life sciences tools companies. The decline in placement expectations of the NovaSeq X instruments proved to be especially concerning after the seemingly strong start of the product launch. Combined with continued challenges with its Grail acquisition, the stock took a hit, although analysts still believe in the potential of DNA sequencing in the future.
