Does Illumina (ILMN) Have Good Long-Term Growth Prospects?

Diamond Hill Capital, an investment management company, released its “Mid Cap Strategy” investor letter for the first quarter of 2025. A copy of the letter can be downloaded here. The first quarter of 2025 was mixed due to a flurry of activity from the new presidential administration. However, the strategy outperformed the Russell Midcap Index in Q1, returning -1.26% (net) vs -3.40% for the index. In addition, you can check the top 5 holdings of the strategy to know its best picks in 2025.

In its first-quarter 2025 investor letter, Diamond Hill Mid Cap Strategy 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 4.86%, and its shares lost 25.15% of their value over the last 52 weeks. On June 4, 2025, Illumina, Inc. (NASDAQ:ILMN) stock closed at $83.16 per share, with a market capitalization of $13.138 billion.

Diamond Hill Mid Cap Strategy stated the following regarding Illumina, Inc. (NASDAQ:ILMN) in its Q1 2025 investor letter:

“As volatility picked up sharply in the quarter, we were active in the portfolio — and we anticipate that as volatility continues into Q2, we will likewise attempt to capitalize on compelling opportunities to reposition the portfolio for the period ahead. We initiated four new positions in Q1: Martin Marietta Materials, Ventas, Illumina, Inc. (NASDAQ:ILMN) and TransUnion.

Illumina provides sequencing- and array-based solutions for genetic and genomic analysis. It has roughly 80% share in its markets, strong fundamentals and a healthy balance sheet. Looking forward, we believe optionality from new tests other companies run using Illumina products, particularly for cancer screening and detection, should create a long-term growth tailwind. Shares have been pressured recently amid weaker end-market demand, combined with concerns about China, new competition from competitor Roche and the potential for National Institutes of Health funding cuts — giving us an opportunity to initiate an investment in a quality business with good long-term growth prospects at the forefront of genetic sequencing.”

Illumina, Inc. (ILMN): Among Small-Cap Healthcare Stocks Hedge Funds is Buying

A research facility with medical professionals surrounded by diagnostic equipment.

Illumina, Inc. (NASDAQ:ILMN) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 60 hedge fund portfolios held Illumina, Inc. (NASDAQ:ILMN) at the end of the first quarter, which was 61 in the previous quarter. While we acknowledge the potential of Illumina, Inc. (NASDAQ:ILMN) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.

In another article, we covered Illumina, Inc. (NASDAQ:ILMN) and shared the list of small-cap healthcare stocks hedge funds are buying. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors.

READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.

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