(By Salman - iStockAnalyst Writer)
Genetic analysis company Illumina Inc. (NASDAQ: ILMN), late on Tuesday, announced impressive quarterly results that sent its stock soaring over 20%.
The company's breathtaking five-year sales growth of 110% recently landed it at the top spot on Forbes magazine’s 25 Fastest-Growing Tech Companies index published this year, ahead of search engine giant Google (NASDAQ: GOOG).
The company manufactures tools that allow commercial scientists, academic researchers and government agencies to analyze genetic variation. Besides differences in eye and hair color, genetic variation gives researchers clues to help them better understand complex diseases. Researchers have employed Illumina’s technology to discover significant genetic variations in adult-onset diabetes, Crohn’s and Parkinson’s diseases and prostate cancer.
The company's latest quarter results beat analyst estimates by wide margins. Illumina reported fourth quarter net income of $28.9 million or 22 cents a share, compared to a net loss of $4.1 million or 4 cents a share in the comparable quarter of 2007.The result for fourth quarter of 2007 included charges of $54.5 million related to a patent lawsuit with rival Affymetrix Inc.(NASDAQ: AFFX). Revenue soared an astounding 43% to $160.9 million from $112.6 million. The majority of the company's revenue came from product sales, accounting for $128.6 million, while service and other lines contributed $11.6 million. Consensus expectations were for earnings of 17 cents a share on revenue of $154.61 million for the quarter.
For full fiscal year 2008, the San Diego, California based company earned $50.5 million, or 38 cents per share, compared with a loss of $278.4 million, or $2.57 a share in 2007. Revenue jumped 56%, to $573.2 million from $366.8 in previous year. The company's cash position is quite strong as well. Illumina finished the year 2008 with $327 million in cash and cash equivalents.
The financial guidance for first quarter and full fiscal year also exceeded consensus estimates. For the first quarter of 2009, the company expects to report revenue in the range of $158 and $164 million and earnings in the range of 23 cents to 26 cents. Analysts currently expect the company to report earnings of 19 cents a share on revenue of $160.58 million for the first quarter. For full fiscal year 2009, the company expects to report earnings in the range of $690 and $720 million and earnings in the range of $1.10 and $1.20.Analysts currently forecast earnings of 88 cents a share on revenues of $707.27 million for fiscal 2009.
Illumina President and CEO Jay Flatley said in a conference call with analysts "Our revenue growth reflects our strong market position in both arrays and sequencing." He acknowledged that the company has more than 70 percent market share in the high-multiplex genotyping market and more than 60 percent market share in the next-generation sequencing market.
The demand for sequencing is expected to grow at a remarkable pace over the next several years. To take advantage of the growth, the company is developing a family of sequencing products to address specific market segments.
Illumina was founded in 1998 by a group of scientists and physicians. In 2007, Illumina bought Solexa, a gene analysis company which catapulted it into a leader in gene sequencing. Affymetrix, the closest competitor of Illumina, recently posted a fourth quarter loss of $318.7 million, or $4.65 a share on revenue of $78.6 million. At a forward P/E of 38.40, the stock certainly does not look cheap, but looking at the growth potential of the sector in general, and company in particular, the future is indeed looking bright for Illumina.
Shares of the Illumina rose $5.98 or 21.36% to $33.97 on Wednesday.
Disclosure: Author does not own any of the stocks discussed here.
