Illumina (NASDAQ:ILMN) stock is down nearly 10% today after a tumultuous second quarter earnings call. The California-based gene-sequencing company failed to meet Wall Street consensus revenue and earnings estimates.
Illumina presented its fiscal second quarter financial results this morning, much to the chagrin of investors. Citing Covid-19 lockdowns in China and volatile currency exchange rates, the company saw a substantial decline in adjusted earnings. It reported earnings per share, or EPS, of just 57 cents, a 70% contraction from last quarter and far behind projected EPS of 64 cents. Illumina did manage to grow sales by about 3%, but still came short of estimates at $1.16 billion compared to $1.22 billion.
Chief Executive Francis deSouza commented on the company’s underwhelming performance:
“Our second quarter did not meet our expectations as challenges in a complex macroeconomic environment more than offset the growth we continue to see in sequencing runs on our platforms.”
What else is going on with Illumina?
ILMN Stock Sinks on Stiff Macro Environment
In its earnings, Illumina slashed it yearly outlook as a consequence of uncertain macroeconomic conditions. The company now predicts sales growth of just 4% to 5%, a steep drop compared to previous guidance around 14% to 16%. This includes roughly $50 million to $70 million in revenue from Grail, a cancer screening company Illumina acquired in 2021. Illumina previously announced expectations for sales between $70 million and $90 million from Grail.
Indeed, ignoring the company’s below-average figures, it still has plenty of potential sources of growth at its disposal. Illumina’s newest cancer screening test, Galleri, which it picked up as part of its acquisition of Grail, saw sales of $12 million in its second quarter. This represents strong and accelerated growth for the screening tool.
Unfortunately, analysts have already downgraded the gene-sequencing company’s stock price target and adjusted earnings outlook for the year. UBS analyst John Sourbeer set a price target of $350 for ILMN, which is currently trading for about $200 per share.
The company’s earnings struggles comes at an inopportune time for Illumina. Last year, the biotech firm was recently named one of the 50 smartest companies in China by the MIT Technology Review. It marks Illumina’s sixth straight appearance on the list. Unfortunately, its earnings woes likely ate up any potential share gains the company may have otherwise enjoyed today.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.