Does Illumina (ILMN) have an Attractive Risk-Reward Opportunity for Long-Term Investors?

Baron Funds, an investment management company, released its “Baron Global Advantage Fund” investor letter for the second quarter of 2025. A copy of the letter can be downloaded here. In the second quarter, the fund returned 22.7% (Institutional Shares), compared to the MSCI ACWI Index’s (the Index) 11.5% gain and the MSCI ACWI Growth Index’s 17.3% gain. The Fund is up 11.2%, year-to-date, compared to gains of 10.1% and 9.3% for the benchmarks, respectively. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its second-quarter 2025 investor letter, Baron Global Advantage Fund highlighted stocks such as Illumina, Inc. (NASDAQ:ILMN). Illumina, Inc. (NASDAQ:ILMN) is a leading supplier of sequencing- and array-based solutions for genetic and genomic analysis. The one-month return of Illumina, Inc. (NASDAQ:ILMN) was -0.84%, and its shares lost 15.40% of their value over the last 52 weeks. On August 4, 2025, Illumina, Inc. (NASDAQ:ILMN) stock closed at $98.44 per share, with a market capitalization of $15.583 billion.

Baron Global Advantage Fund stated the following regarding Illumina, Inc. (NASDAQ:ILMN) in its second quarter 2025 investor letter:

“We also added to our position in the leading DNA sequencing platform, Illumina, Inc. (NASDAQ:ILMN). Illumina is the dominant next generation sequencing tools provider, a technique that enables massive amounts of genetic analysis in both research and clinical diagnosis. The stock has come under heavy pressure recently due to a confluence of several factors including: 1) Pricing pressure from transition to the next-gen ‘X’ platform; 2) China business at risk after getting caught up in U.S./ China trade tensions; 3) The new administration’s focus on cutting National Institutes of Health (NIH) funding for life sciences; and 4) Roche’s competitive launch coming next year.

We believe, however, that the risk reward is quite attractive for long-term investors. The transition to the new ‘X’ platform masks strong underlying growth of 30% to 40% in recent quarters due to the lower per-genome price – and historically lowering the price of sequencing has been a positive driver of industry growth despite volatility during transition periods. China represents only 5% of the business, while NIH is 10% to 12%. The new Roche tool has not been launched yet – but we believe that given the long runway for growth in the industry and Illumina’s strong end-to-end competitive moat, it should maintain a leading positioning in the market…” (Click here to read the full text)

In another article, we covered Illumina, Inc. (NASDAQ:ILMN) and shared the list of top healthcare AI stocks to buy according to hedge funds. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.