Tuesday, April 26, 2011

Illumina Inc. (NASDAQ: ILMN): Q1 Earnings Preview 2011

Illumina Inc. (NASDAQ: ILMN) is scheduled to release its first-quarter earnings after the closing bell on Tuesday, April 26, 2011. Analysts, on average, expect the company to report earnings of 31 cents per share on revenue of $261.41 million. In the year ago quarter, the company reported earnings of 21 cents per share on revenue of $192.13 million.

Illumina, Inc. engages in the development, manufacture, and marketing of integrated systems for the analysis of genetic variation and biological function. Genomics is emerging as a growing market within the life sciences sector, offering attractive growth opportunities and products that will potentially change the field of research. Illumina's customers include genomic research centers, pharmaceutical companies, academic institutions, clinical research organizations, and biotechnology companies.

In the preceding fourth quarter, the San Diego, California-based company's net income was $38.4 million, or 25 cents per share, compared to $11.7 million, or 9 cents per share, in the year-earlier quarter. Adjusted income, which excludes special items, was$40.9 million or 29 cents per share, compared to $27.0 million or 21 cents per share in the same quarter of last year. Analysts, on average, expected the company to report earnings of 29 cents per share on revenue of $255.75 million. 

At its last earnings call in February, the company said that it expects fiscal 2011 earnings of $1.01 per share, and adjusted earnings of $1.40 per share. The company expects revenue growth for the full year of 2011 of approximately 20% from 2010 revenues of $903 million. It expects expect gross margin to improve over the course of the year to 70% for the full year. 

The firm is seeking to keep a competitive edge by spending generously on new development. In 2010, it spent $178 million on R&D, or 19.7% of $903 million in total revenue.

During the quarter in review, Illumina closed $800 million of 0.25% Convertible Senior Notes due 2016. Illumina said it has used $314.3 million of the net proceeds from this offering to purchase 4.89 million shares of its common stock in privately negotiated transactions concurrently with this offering. The company also intends to use between about $260 million and $390 million of the net proceeds of the offering to fund conversions of its currently outstanding convertible notes. Illumina intends to use the balance of the net proceeds for other general corporate purposes, which may include acquisitions and additional purchases of its common stock.

The company's stock currently trades at a forward P/E (fye Jan 2, 2013) of 37.58 and PEG ratio (5 yr expected) of 1.79. In terms of stock performance, Illumina shares have gained nearly 90 percent over the past year.

Full Disclosure: None.
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