Two years ago, ILMN was a $60B enterprise value (EV = mkt cap+debt-cash), up 10x from 2012. Revenues grew 3.5x in that time. Net income this year will be below 2012 despite the revenue growth. Today the EV is $18B. ILMN made many acquisitions of loss-making companies in the gene analysis space over the years. That strategy has come home to roost very hard now. The company clearly failed to manage these acquisitions well as operating costs have soared. ‘
The good news is that the company still generates free cash flow. The estimate for next year ranges from $550-$750 but that assumes a quite generous revenue growth estimate of 8-12%.
The stock has fallen despite the company beating EPS estimates the last four quarters. If you believe the analysts, ILMN should earn $7.50 a share in 2026, only 2 years away. The company is trading at 14x PE on that number which seems quite reasonable for such an industry leader and largely in line with Thermo Fisher and Agilent.
Thoughts?
I do not own any shares. Yet.
