2. Illumina, Inc. (NASDAQ:ILMN)
No of HFs: 44
Total Value of HF Holdings: $1.3 Billion
Illumina, Inc. is a developer and producer of integrated systems that focus on the analysis of genetic variation and biological function. During the third quarter of 2020, the company announced a revenue of $794 million, an increase of 26% compared to the second quarter of 2020. We wrote an article on the 12 best large biotech stocks to buy now and ILMN was one of them.
In a separate article, Baron Asset Fund’s mentioned comments on ILMN
Illumina, Inc. is the leading manufacturer of DNA sequencing systems for genetic analysis. Shares fell as lower utilization of the company’s systems during COVID-19 led to disappointing second quarter financial results. Illumina also announced the acquisition of Grail, which is developing a blood test for early stage cancer detection. Investors responded negatively to the acquisition because of substantial near-term earnings dilution and concerns about competition with Illumina’s customers. Although we appreciate these concerns, we believe the Grail investment offers the potential for significant long-term value creation in the rapidly growing market for early cancer screening.
In a separate article, RiverPark Advisors, LCC mentioned that ILMN is the clear innovation leader in sequencing and array-based solutions for genetic analysis.
Illumina: ILMN shares were our top detractor for the quarter, as the market viewed negatively its $8 billion purchase of liquid biopsy leader GRAIL. The acquisition marks a shift in strategy for Illumina from its highly profitable selling of tools to the liquid biopsy market (among other markets) to actively participating in the development of tests themselves. This market (earlystage cancer screening via blood samples), however, is a massive long-term opportunity that can dramatically change the face of healthcare. GRAIL is a leader and should have a commercial product as early as next year.
We continue to view the company’s core genomics industry as offering one of the larger total addressable markets that we cover, and ILMN is the clear innovation leader in sequencing and array-based solutions for genetic analysis. With less than 0.02% of humans having been sequenced and 99% of the variants discovered in the genome having not yet been deciphered, Illumina, at only $3.4 billion of TTM revenue, is still in its infancy in what is potentially a greater than $50 billion genetics analysis tools market opportunity. With Illumina’s entrance into the potentially larger liquid biopsy market, we believe that the company has a significantly larger growth opportunity ahead.
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