Why Illumina, Inc. (NASDAQ: ILMN) stock is falling

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Illumina, Inc. (NASDAQ: ILMN) stock fell over 5.1% on 30th January, 2020 (As of 11:20 am GMT-5; Source: Google finance) post the fourth quarter of FY19. Sequencing system revenue had fell down slightly sequentially and down 12% compared to last year. Sequencing service and other revenue was down $14 million sequentially to $124 million due to lower IVD licensing and milestone revenue and lower GeL volumes in the fourth quarter, but up 19% year-over-year. Array systems grew up $2 million sequentially, but down $5 million from a particularly strong fourth quarter of 2018. Array consumables increased $18 million sequentially due to DTC seasonality with one customer ramping ahead of the holiday season, but were modestly down from the same quarter last year. Array services were down $6 million sequentially and down $8 million or 32% year-over-year driven by lower demand from the DTC customer.

NovaSeq consumable pull-through was at its highest level of the year in the quarter and indeed the highest since the platform was launched, due to in part by the UK Biobank, which is now operating at scale. The company had shipped more than 100 NovaSeq systems in the fourth quarter.

ILMN in the fourth quarter of FY19 has reported the adjusted earnings per share of $1.70, while reported the adjusted revenue growth of 10 percent to $953 million in the fourth quarter of FY19. Total sequencing revenue grew 14% to $837 million from the fourth quarter of 2018 and represented 88% of total revenue compared to 85% in the same quarter last year. Sequencing consumable revenue grew 22% to $572 million or over $100 million compared to the fourth quarter of 2018.

For fiscal 2020, the company expects year over year revenue growth to be in the range of 9% to 11%, and expects non-GAAP earnings per diluted share to be in the range of $6.80 to $7.00. The analysts expect $6.73 a share, or $7.02 a share as adjusted, with revenue increasing about 11%.

ILMN is targeting a pull-through range of $1.1 million to $1.2 million per NovaSeq system in 2020. The company expects to ship approximately 500 NextSeq 1000s and 2000s this year.

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