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What's the Outlook for Illumina?

Genomic sequencing leader Illumina (NASDAQ: ILMN) recently provided guidance for 2022 and revealed some of its plans for the year. In this Motley Fool Live video, recorded on Jan. 12, Fool contributors Keith Speights and Brian Orelli discuss the outlook for Illumina going forward.

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Keith Speights: Hey, there's a company that you and I haven't talked about very much, at least, I'm going to say at least over the last seven or eight months and maybe longer than that. Illumina. Illumina was one of the early presenters at the JP Morgan (NYSE: JPM) conference this week and the company provided its 2022 guidance and it discussed some of its plans for this year. Brian, what's the outlook for Illumina now?

Brian Orelli: It's great to see companies reporting preliminary fourth-quarter revenue at JP Morgan. It makes me miss Celgene [a part of Bristol-Myers Squibb (NYSE: BMY)] a little bit less, and of course, Celgene they were fast. Not only were they able to calculate their preliminary revenue, but the bean counters were even able to calculate the preliminary earnings and there's a lot more moving parts on the expense side versus just calculating the revenue. I think I digress, but I definitely miss Celgene for sure at this time of year.

Illumina reported preliminary fourth-quarter revenue of approximately $1.19 billion. That's up 25% year-over-year. That's down from the preliminary growth for the entire year, which was 39%, so it did 39% for the entire year, but in the fourth quarter, it was only up 25%.

The company also released revenue guidance for 2022, and it's looking for growth of 14% to 16%. That's obviously substantially lower than 39% it had in 2021. But maybe 2022 was a rough comparator, the labs were shut down for some part of that year, so they had a good bump up in 2021. Fourteen to 16% for 2022 is still not that bad of a growth.

Shares were up on the announcement. I think investors were expecting a slowdown in 2022. As I said, around 15% growth isn't too bad. I wonder if some of the exuberance was from the consumable sales from 2021.

Consumable sales were around $3 billion dollars, and recurring revenue, which includes consumables plus services that was at 80% year-over-year. It had 3,200 new placements in 2021, and that brings the cumulative base of sequencers to over 20,000.

Those things are just going to keep generating consumable sales and they're going to need to be repaired, so they're going to generate some services, contracts as well. I think that Illumina is in great shape to continue growing.

Speights: Yeah and 80% recurring revenue is astounding. I mean, solid business there. Maybe not as high growth as some other companies out there, but Illumina, they're the 800-pound gorilla in gene sequencing and continue to dominate that market.

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Brian Orelli, PhD has no position in any of the stocks mentioned. Keith Speights owns Bristol Myers Squibb and Illumina. The Motley Fool owns and recommends Bristol Myers Squibb. The Motley Fool recommends Illumina. The Motley Fool has a disclosure policy.


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