Illumina

Illumina Q3 2024 $ILMN (+3.46%)

Financial performance

• RevenueCore sales amounted to USD 1.1 billion, a decrease of 2% compared to the previous year on a constant currency basis.
• Operating marginGAAP operating margin was an impressive 68.6%, while the non-GAAP margin was 22.6%, demonstrating operational efficiency despite the decline in sales.
• Earnings per share (EPS)GAAP EPS was USD 4.03 and non-GAAP EPS was USD 1.14, which are important metrics for investors to assess earnings power.

Balance sheet

• Cash and cash equivalentsIllumina had USD 869 million in cash and cash equivalents as of September 29, 2024, which provides a good basis for future investments.
• Total assets and equityThe company reported total assets and equity of USD 6,014 million each.

Results of operations and cash flow

• Gross marginGross margin was 68.9% on a GAAP basis and 70.5% on a non-GAAP basis, reflecting strong cost efficiencies.
• Net incomeGAAP net income was USD 642 million, while non-GAAP net income was USD 181 million, a clear indication of differences in reporting and balance sheet adjustments.
• Operating cash flow and free cash flowOperating cash flow was $316 million, with free cash flow after capital expenditures of $284 million. This shows that Illumina still has strong cash reserves after capital expenditure.

Segment and competitive position

• Core salesCore segment sales amounted to USD 1.1 billion and the company was able to demonstrate its innovative strength through product launches such as the MiSeq i100 series and FDA approval for TSO Comprehensive.
• CompetitivenessIllumina is focusing strongly on innovation projects, such as the further development of whole genome sequencing and single cell technology, in order to further expand its market potential.

Forecasts and management comments

• Sales forecast: The sales forecast for 2024 has been revised downwards and is expected to fall by around 3% year-on-year.
• Management commentaryCEO Jacob Thaysen emphasized the robust operating results and the progress in margin and earnings improvements despite a constrained macroeconomic environment.

Risks and opportunities

• Risks: The macroeconomic environment remains tense, which is weighing on sales expectations.
• Opportunities: Innovation initiatives and strategic product launches, particularly in the field of genome and single-cell research, offer growth opportunities and strengthen the market position.

Conclusion

Illumina delivered a strong margin and cash flow performance in Q3 2024 despite declining sales. The company continues to focus on innovation and strategic market launches to drive long-term growth. Despite the adjusted sales forecast, the balance sheet remains solid and management is optimistic about margin expansion and earnings growth.

Positive aspects

Strong operating marginsIllumina achieved a GAAP operating margin of 68.6% and a non-GAAP operating margin of 22.6% in the third quarter of 2024. This demonstrates the company's ability to maintain an efficient cost structure and effective operations.

Improved cash flowFree cash flow increased to USD 284 million in the third quarter of 2024, compared to USD 94 million in the previous year. This improvement reflects stronger cash management and operational efficiency.

Product innovations: Illumina launched the MiSeq i100 Series as a new sequencing platform and received FDA approval for TSO Comprehensive, underscoring the company's commitment to research and product diversification.

Increased EPS guidance: The company has raised its FY2024 non-GAAP EPS guidance to a range of $4.05 to $4.15, signaling confidence in its earnings potential.

Strategic successes: Illumina won the legal dispute in the European Court of Justice regarding the jurisdictional issue in the GRAIL acquisition. This could have a positive impact on strategic positioning and legal position.

Negative aspects

Decline in salesCore Illumina's sales in the third quarter of 2024 amounted to USD 1.1 billion, a decline of 2% compared to the previous year. This indicates difficulties in maintaining revenue growth in a challenging macroeconomic environment.

Reduced revenue guidanceIllumina lowered its sales forecast for the 2024 financial year, which is now expected to decline by around 3% compared to the previous year. This indicates additional challenges in achieving previous sales targets.

High amortization of goodwill and intangible assetsThe company reported a high impairment of USD 821 million, which has a negative impact on net income and indicates possible overvaluations of acquired assets.

Rising operating expensesDespite cost-cutting measures, overall expenses remained high, particularly due to legal provisions and adjustments. This has a negative impact on the company's overall cost structure.

Macroeconomic constraintsManagement indicated a challenging macroeconomic environment that could continue to impact sales growth and operating performance in the short term.

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Construction of a biotech ETF🧬🚀

I'm a fan of the whole topic and don't really like the sector ETFs on the market in terms of costs and performance. That's why I've dared to construct my own "biotech ETF". I've written down my thought process here and hope you enjoy it a little 😉

1. focus areas according to growth and profitability

The percentage distribution of focus areas is based on an analysis of the growth and profitability potential of each therapeutic area within the biotechnology industry, taking into account various market conditions and dynamics. The reasons for this distribution are as follows:

• Oncology (25%): The oncology market is a large and rapidly growing market due to the high prevalence of cancer and increasing demand for innovative cancer therapies. The growth potential is supported by the continuous introduction of new cancer drugs and therapies.

• Neurology (20%): Although the neurology market is smaller compared to the oncology market, it still offers considerable potential for growth and profitability. The increasing prevalence of neurodegenerative diseases and the need for novel treatment approaches contribute to this potential.

• Immunology (15%): Immunology is an established market with a wide range of therapies for various autoimmune diseases and cancers. Although the market is relatively saturated, advances in immunotherapy continue to offer opportunities for growth and profitability.

• Infectious diseases (20%): The infectious diseases market has gained significant importance due to global health crises such as the COVID-19 pandemic. The increasing demand for vaccines, antiviral therapies and diagnostic tests to combat infectious diseases is contributing to robust growth and profitability potential.

• Cardiovascular diseases (10%): Although the cardiovascular disease market is not growing as fast as other areas, it remains a significant market with some growth potential. Advances in the treatment and prevention of cardiovascular diseases could contribute to further growth.

Genetic diseases (10%): The market for genetic diseases is smaller but highly specialized and growing thanks to advances in genomic research and genome editing technologies. The increasing demand for personalized therapies for rare genetic diseases is contributing to stable growth.

By taking into account market size, growth potential and profitability, we have determined a percentage distribution of focus areas that reflects the attractiveness of each area for investment in the Biotech ETF.

2. selection of companies and their focus areas

Based on the evaluation of the focus areas, we have selected ten biotech companies that cover a broad range of therapeutic areas and hold leading positions in their respective focus areas. The companies and their focus areas as well as the percentage distribution are as follows:

• Amgen ($AMGN (+1.94%)):

Introduction: Amgen is a leading global biopharmaceutical company dedicated to the discovery, development and commercialization of innovative therapies. The company is known for its breakthrough developments in oncology, immunology and genetics.

Focus areas:

Oncology: 30%

Immunology: 20%

Cardiovascular diseases: 20%

• Genetic diseases: 30%

• Regeneron Pharmaceuticals ($REGN (+0.72%)):

Introduction: Regeneron Pharmaceuticals is a biopharmaceutical company focused on the development of drugs for serious diseases. The company is known for its pioneering research and development in the fields of oncology, neurology, immunology and infectious diseases.

Focus areas:

Oncology: 30%

Neurology: 30%

Immunology: 20%

• Infectious diseases: 20%

• Vertex Pharmaceuticals ($VRTX (+0.74%)):

Introduction: Vertex Pharmaceuticals is a leader in the development of therapies for rare genetic diseases. The company is dedicated to researching and developing drugs to improve the lives of patients with genetic disorders.

Focus areas:

• Genetic diseases: 100%

• Intellia Therapeutics ($NTLA (+3.44%)):

Introduction: Intellia Therapeutics is a pioneer in the field of genome editing, utilizing CRISPR/Cas9 technology to develop therapies for genetic diseases, oncology and infectious diseases. The company strives to create the next generation of gene therapies.

Focus areas:

Genetic diseases: 50%

Oncology: 30%

• Infectious diseases: 20%

• Biogen Inc. ($BIIB (+0.71%)):

Introduction: Biogen is a leading global biotechnology company focused on the research and development of therapies for neurological diseases. The company has made some of the most significant breakthroughs in the treatment of diseases such as multiple sclerosis and Alzheimer's disease.

Focus areas:

• Neurology: 100%

• Moderna, Inc. ($MRNA (+7.38%)):

Introduction: Moderna is an innovative biopharmaceutical company focused on the development of mRNA therapies and vaccines. The company has attracted worldwide attention for the development of an mRNA vaccine against COVID-19.

Focus areas:

Oncology: 70%

• Infectious diseases: 30%

• Illumina, Inc. ($ILMN (+3.46%)):

Introduction: Illumina is a leading provider of genomics and genomic analysis technologies. The company is revolutionizing genomics by developing cutting-edge sequencing technologies and making significant contributions to genetic disease research.

Focus areas:

• Genetic diseases: 100%

• CRISPR Therapeutics AG ($CRSP (+3.39%)):

Introduction: CRISPR Therapeutics is a leader in the application of CRISPR/Cas9 genome editing technologies to treat genetic diseases. The company has the potential to revolutionize the way we treat genetic diseases.

Focus areas:

• Genetic diseases: 100%

• Alexion Pharmaceuticals, Inc.$n/a): (ISIN: US0153511094)

Introduction: Alexion Pharmaceuticals is a biopharmaceutical company focused on developing therapies for rare and life-threatening diseases. The company has a strong presence in the fields of neurology and immunology.

Focus areas:

Neurology: 40%

• Immunology: 60%

• Qiagen N.V. ($QGEN):

Introduction: Qiagen is a global leader in molecular diagnostics and research products. The company is known for its innovative technologies to diagnose infectious diseases and support life science research.

Focus areas:

Infectious diseases: 100%

This selection of companies represents a diverse range of focus areas and positions in the biotechnology industry and enables

3. weighting of the ETF based on focus areas and companies

Finally, we determined the allocations for each stock based on its exposure to the focus areas and its relative importance within the portfolio. We considered both the growth and profitability potential of each focus area. The final allocation of stocks is as follows:

Regeneron Pharmaceuticals (ticker: REGN): 25%

Moderna, Inc. (Ticker: MRNA): 18%

Intellia Therapeutics (Ticker: NTLA): 16%

Amgen (Ticker: AMGN): 16%

Alexion Pharmaceuticals, Inc (Ticker: ALXN): 10%

Biogen Inc (Ticker: BIIB): 6%

Qiagen N.V. (Ticker: QGEN): 5%

Vertex Pharmaceuticals (Ticker: VRTX): 2%

Illumina, Inc. (Ticker: ILMN): 2%

CRISPR Therapeutics AG (Ticker: CRSP): 2%

This weighting ensures that the portfolio has a good balance between different focus areas as well as an appropriate exposure to the leading companies in the biotechnology industry.

By considering market size, growth potential and profitability, we have determined a percentage distribution of focus areas that reflects the attractiveness of each area for investment in the biotech ETF.

I look forward to receiving feedback and assessments ✌️😉

Your Value Willi

Are any of you in here? What happened this week?

Name and field of activity sounds like something out of a movie where the world ends... I like

"Ilumina (ISIN: US4523271090 - symbol: ILMN -currency: USD) is the undisputed market leader in automated sequencing machines for genetic research. The devices enable DNA sequences to be analyzed, for example from the human genome or from viruses such as the Corona virus. This also plays an important role in the development of personalized medicine. After analyzing the genetic, molecular and cellular characteristics (the so-called "biomarkers"), an individual therapy is developed for each patient with different use of drugs. In this way, cancer cells or HIV viruses, for example, can be efficiently combated. Illumina's customers include biotech and pharmaceutical companies, universities, laboratories and research centers, for example."

https://www.lynxbroker.de/boerse/boerse-kurse/aktien/die-besten-aktien/die-10-besten-artificial-intelligence-aktien/

Possibly worth a look

GenEditing - Disruptive Opportunity in Healthcare🏥?

Gene editing involves inserting, deleting or replacing DNA in a cell or organism. The "CRISPR process" offers us an exciting alternative here. The possibility of such gene editing could clear a path for us to be able to cure genetic diseases or prevent them at an early stage.

The possibility to be able to change individual "codes" in our body, in order to be able to recognize thus arising illnesses or other counter sides at an early stage sounds in the first sense madly exciting! However, in order to be able to carry this out, it is essential to make the codes "visible" in order to identify them individually and to be able to recognize with which diseases individual genes are connected. This process is made possible by gene sequencing.

Illumina is a US manufacturer of equipment for genetic engineering. The company offers sequencing and array-based solutions for genetic and genomic analysis. In addition, the acquisition of GRAIL, which is working to offer early detection of up to 50 types of cancer through blood testing, is another exciting field. With Illumina, we have a shovel seller within the industry, which is also a market leader with a market share of around 70%.

In this regard, I see the field of GenEditing as having a very promising future, although it is difficult to see who will ultimately make the big breakthrough. Thus, in my opinion, Illumina offers a super alternative to participate in the market growth as a shovel seller of the preceding analyses.

What is your opinion on gene editing and the opportunities/risks in this field?

🙋🏽‍♂️Wir consider here a complex topic, in which also I am no PROFI! Nevertheless, I find the issue very exciting & accordingly it would be very nice if we can start an input regarding the companies!

☀️ Have a nice weekend

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Source: Illumina.com,
doccheck.com,
biospace.com,
stocknews.com,
fool.com,

You can find an exciting & detailed presentation on YouTube at Aktienfieber

Genetic engineering - progress on track 🚀?

From August 8, 2011 to the present day, the company's share price has increased by 1059%! With a current KBV of 14.1 as well as a P/E ratio of 94.7, these indicate a very high valuation. Nevertheless, do aspects speak for the company & is an entry worthwhile?🏆.

What does Illumina🏥 do?

🧬Manufacture the devices for gene sequencing.

According to a study by the UK Competition and Markets Authority, Illumina's equipment, reagents & spcial cells are applied in 80% - 90% of all sequencing

🛸"Next Generation Sequencing" Platform

Revolutionary drive in biology (the sequence of nucleotides in whole genomes or target regions of DNA or RNA at the highest level is hereby determined)

Reasons for further Wachstum💪🏼?

💰llumina's great contribution of cost reduction.

In 2005, the sequencing of a human genome had a price tag of about $10 million; today, the price tag is about $1000.

👨🏽‍⚕️Treibender Innovation boost

The fall in the price of DNA sequencing is causing the industry to become more innovative

💸Increasing profits

Average profit growth of 7% over the last five years, 11.6% within the last fiscal year

Did you already know the company or even have it in your portfolio🤪?

What do you think, will we still be able to gain percentages in this sector🧐?

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Source: The Motley Fool, Investing.com