Illumina's 'Surprise' Announcement is not Surprising

Disclaimer: The following post is not financial advice. It is only for entertainment purpose.

Illumina stock crashed two days back due to ‘unanticipated’ weakness in Europe. Wall Street Journal writes -

Illumina Shares Take Hit on Weakness in Europe

Shares plunged 24% to $135.46 in midday trading in New York, a decline that would erase roughly $6 billion of the companys market value in one day if the stock closes at that level. Analysts said the companys revenue forecast could reflect a misread of the market environment in Europe and that Illumina is likely to be alone among its peers in posting underwhelming results on the region.

Illumina, the maker of gene-sequencing machines, said Monday that sales of its HiSeq 2500, 3000 and 4000 instruments were lower than anticipated in Europe, resulting in management changes in the region. The company blamed greater- than-expected outsourcing, which analysts said could reflect more lab and equipment sharing. The company also pointed to fewer upgrades of older instruments.

However, the above phenomenon should not surprise our readers, who were warned repeatedly of the possibility of over-investment and saturation in the sequencing space.

Mar 21, 2016: Is Huge Business Downturn Coming in the Sequencing Industry?

Feb 13, 2016 (mentioned Illumina to make the case): Our #AGBT16 Forecast Oxford Nanopore Will Go Out of Business by 2017

Nov 24, 2015: Peak Sequencing Consequence? BGI Delays Launch of Nation-scale Sequencer

Oct 31, 2015: Happy Halloween Says Illumina Stock

Jun 6, 2015: Peak Sequencing? BGI Unveils Nation-scale Sequencer

Readers may note that Illumina stock peaked within weeks of our ‘peak sequencing’ post.

Although our posts are for entertainment purpose only, we like to point out that other publications in serious investment business are telling their readers to buy Illumina stocks.

Barrons (Apr 21): Illumina Selloff Offers a Good Buying Opportunity

[You need to pay to see their advice]

Motley Fool (Apr 21): Are Illumina’s Shares Worth Buying on This Drop?

Do the competitive threats and European uncertainty make Illumina too risky to buy right now? Not necessarily. Clearly, investors need more insight into why Europe’s growth is slowing, but assuming it’s not related to competitors, there’s enough to like about Illumina to think a sell-off could be temporary. After all, Illumina remains the market share leader in a lucrative and fast- growing industry, and given Illumina’s well established leadership position and its R&D; depth, picking up its shares when they’re trading on sale could be a savvy long-term decision.

We also pointed out in an earlier post that the geniuses from MIT and Forbes were extremely bullish on Illumina right at the peak.

Things were quite opposite a few months back, when one had to search hard to find anything negative about the company. All geniuses everywhere predicted sunny skies, be it Matthew Harper, Luke Timmerman or MIT Tech Review.

[DNA Sequencing Market Will Exceed $20 Billion, Says Illumina CEO Jay Flatley

MIT technology review - Illumina is the smartest company

Inside Illuminas Plans to Lure Consumers with an App Store for Genomes

It would be rather ironic, if the Illumina stock refuses to follow the experts and continues along the path outlined by the clowns like us (see figure at the top of the post). You’ve been warned entertained !