Illumina Dives as Quarterly Revenue Falls Short of Forecast

  • Preliminary results miss July guidance, analysts’ estimates
  • Gene-sequencer machine sales fell 26% year-over-year, CEO says

Illumina Inc. plunged as much as 28 percent, the most in five years, after saying third-quarter sales were lower than it previously anticipated because of declining demand for its high-speed genetic sequencers.

Sales were about $607 million last quarter, the company said Monday in a statement after the markets closed. That’s below Illumina’s July forecast of $625 million to $630 million, and the $628 million average of analysts’ estimates compiled by Bloomberg.

“We are clearly disappointed by the preliminary revenue result,” Chief Executive Officer Francis DeSouza said Monday in a short call with investors. Revenue from sequencing instruments declined 26 percent year-over-year, a bigger drop than anticipated at the start of the quarter, he said.

The shares were down 25 percent to $139.11 at 10:07 a.m. in New York, after earlier dropping as low as $133.80, their biggest intraday loss since October, 2011. Through the close Monday, San Diego-based Illumina had risen 31 percent in three months on speculation it might be a takeover target.

Pacific Biosciences, which also makes machines to read the human genome, dropped as well, falling 5.8 percent to $8.53.

Illumina’s sales miss suggests that the gene sequencing market is saturated, Dane Leone, an analyst with BTIG, said in a note to clients.

“Clearly, a divergence has occurred whereby internal growth forecasts are failing to accurately reflect market demand,” Leone said. He rates the stock the equivalent of hold.

The third-quarter revenue results imply an increase of 10 percent from a year earlier. Fourth-quarter sales will remain steady or rise slightly sequentially, Illumina said. the company will post full third-quarter results on Nov. 1.

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