Healthcare
ILMN was pitched as a long idea at one of MYST’s recent Buy side events - the Presenter has followed the stock for quite some time and has maintained a cautious view until recently. He sees top line growth accelerating from “flattish” in FY25 to +MSD% in FY26 and +HSD-to-LDD% in FY27 as ILMN transitions from old to new generation products. He thinks competition from Ultima Genomics and Element Biosciences is vastly overstated and envisions operating margins returning to 30%+. Applying a 35x multiple to his FY27 EPS estimate of ~$8.00 (vs. $5.79 consensus) he arrives at a 2-year TP of $280 (~100% upside).
Edition: 197
- 18 October, 2024
Healthcare
Abacus expects Grail to be divested in 2023/24 and the regulatory mess to clear over the next 12 months - this leaves the core ILMN business, which looks attractive given the current instrument upgrade cycle and high elasticity of demand should allow mid-teens revenue growth in 2024/25 with 25-28% operating margins and enable ROCE to recover back to >14%. Increasing competition is not considered to be a major factor as it will be hard for newcomers to grab a meaningful share, especially in the high-throughput segment. They see the core business generating EPS of ~$10 sometime in 2026 vs. consensus estimates of $5 in 2025. TP $350 (50%+ upside).
Edition: 158
- 14 April, 2023