Is There Light at the End of the Tunnel for Illumina Stock?

ILMN is down nearly 20% in 2022

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Illumina, Inc. (NASDAQ:ILMN) was last seen down 0.4% at $313.90 and earlier hit its lowest level in over a year, extending its year-to-date deficit to 17%. Like most of the market, ILMN has seen a pretty dramatic selloff during the past couple weeks, with its recent rebound attempt squashed by the 30-day moving average.

ilmn chart feb 24

Short-term options bulls are targeting the sinking stock. This is per ILMN's Schaeffer's put/call open interest ratio (SOIR) of 1.22, which stands in the 75th percentile of its annual range. In other words, these players have rarely been more put-biased during the past year. 

Nonetheless, the biotech company posted a 40% increase in revenues and a 16% increase in net income for fiscal 2021. Illumina is also expected to deliver a 26% increase in earnings and a 14.5% increase in revenues for fiscal 2022.

Illumina stock doesn’t offer the most appealing outlook from a fundamental point of view beyond its expected growth next year and its fiscal 2021 figures. In recent years, ILMN’s growth has fluctuated, most notably experiencing a 9% decline in revenues and a 35% decrease in net income for fiscal 2020. Although Illumina's revenues have recovered, its net income is still down 24% since fiscal 2019.

In addition, Illumina stock has an extremely high valuation. trading at forward price-earnings ratio of 75.76 and a price-sales ratio of 10.41, which are both rich values even for a long-term growth play.

 

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