ILMN · Illumina
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $249.39
Note written ·
Price against the kill line
17.0% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $249.39, on record since 11 November 2026. The shares are up 7.2% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $249.39, the level of the 50-day average of closes on 11 November 2026, which would show the shares leading the market again; a fiscal 2026 revenue range raised above $4.66 billion would point the same way.
Research onlyNot in the portfolio.
Key figures from the filings · Health Care
Quarter to 27 September 2026, filed 30 October 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 1,129
- Revenue, change on a year (%)
- +4.2
- Gross margin (%)
- 73.5
- Operating margin (%)
- 27.0
- Free cash flow, four quarters ($M)
- 1,057
- Net cash, cash less debt ($M)
- −500
- Price to earnings (×)
- 35.0
- Enterprise value to sales (×)
- 7.0
All filed numbers
What Illumina reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 1,129 | +4.2 | 73.5 | 27.0 |
| first filed | 1,159 | +9.4 | 66.4 | 21.1 |
| first filed | 1,091 | +4.8 | 66.1 | 19.2 |
| first filed | 1,159 | +5.0 | 65.5 | 17.3 |
| first filed | 1,084 | +0.4 | 67.6 | 20.9 |
| first filed | 1,059 | −4.8 | 65.6 | 20.2 |
| Pre-tax income ($M) | 264 |
| Net income ($M) four quarters: 895 | 220 |
| Diluted shares, change on a year (%) against the quarter to 28 September 2025 | 0.0 |
| Operating cash flow ($M) | 1,230 |
| Capital spending ($M) | 173 |
| Free cash flow ($M) | 1,057 |
| Cash and short-term investments ($M) | 1,289 |
| Debt ($M) notes | 1,789 |
| Net cash, cash less debt ($M) | −500 |
| Deferred revenue ($M) +3.9% on a year | 319 |
| Backlog, orders not yet delivered ($M) +24.9% on a year | 933 |
| Receivables ($M) | 738 |
| Inventory ($M) | 667 |
| Shareholders' equity ($M) | 3,145 |
| Market value ($M) | 31,300 |
| Enterprise value, market value plus net debt ($M) | 31,800 |
| Enterprise value to sales (×) | 7.0 |
| Enterprise value to operating income (×) | 33.1 |
| Price to earnings (×) | 35.0 |
| Price to book value (×) | 10.0 |
| Free-cash-flow yield (%) | 3.4 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 5.2% of shares outstanding sold short, 2.9 days of average trading to cover, −16.8% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $415.9M |
| 12 monthsfrom | $24K | $720.6M |
The thesis
Illumina's shares are more likely to lag the S&P 500 over the next three months. Third-quarter organic growth was 4.8%, China sits outside the clinical growth rate, and on 10 November 2026 management declined to give 2027 guidance. The fourth-quarter report, expected around February 2027, settles whether the raised $4.64–$4.66 billion fiscal 2026 revenue range holds.
The business is still improving. Illumina raised its fiscal 2026 revenue range from $4.60–$4.64 billion and its adjusted earnings-per-share (EPS) range from $5.30–$5.40 to $5.40–$5.45 on 29 October 2026, according to its 8-K. Investing.com reported the shares fell about 12% after hours that evening, with investors focused on China.
The market has already marked the shares down. They closed at $212.93 on 11 November 2026, 31.2% below the $309.35 intraday 52-week high of 6 October 2026. That is under MarketBeat's $238.53 consensus target of 1 November 2026 and close to Citigroup's $210 Sell target of 2 November 2026.
On 10 November 2026 company news reported management saying 2027 is on track for high-single-digit revenue growth and an operating margin of at least 25.5% as a starting point. The same report says it is not giving 2027 guidance. A framework without guidance leaves the 2027 numbers for the February report to confirm.
Bullish and bearish views on Illumina, Inc.
The bull case on Illumina, Inc. (ILMN), in brief: guidance rose on all three lines. The bear case: a director keeps selling.
Bull case
- Guidance rose on all three lines. The 29 October 2026 8-K raised revenue to $4.64–$4.66 billion, adjusted EPS to $5.40–$5.45 and the non-GAAP operating margin outlook to 23.6% from 23.4%–23.6%. Benzinga put the consensus at $4.625 billion revenue and $5.36 EPS.
- Clinical demand leads the quarter. CEO Jacob Thaysen credited "healthy clinical demand and robust NovaSeq X placements" for results above guidance in the 8-K. On the call, management said clinical sales outside China grew 14% and kept its mid-teens clinical consumables outlook.
- Cash generation improved. Third-quarter operating cash flow was $419 million against $284 million a year earlier. Free cash flow was $378 million against $253 million, per the 8-K.
- A government genomics contract extends the base. Company news on 3 November 2026 said Illumina won the SG-INSIGHT sequencing contract in Singapore, covering about 450,000 residents after Phase II delivered more than 100,000 genomes.
- Several brokers keep targets well above the price. After the report, JPMorgan kept Overweight with a $300 target (cut from $320) and Evercore ISI kept Outperform with a $275 target, both on 30 October 2026. Daiwa Securities raised its target to $228 from $196 on 10 November 2026.
Bear case
- A director keeps selling. SEC Form 4 filings show director Keith Meister sold 281,433 shares at $225.12–$241.42 (average $236.50) on 3 November to 4 November 2026. Corvex funds had sold 263,560 shares on 2 September to 4 September 2026. The shares closed at $208.00 on 5 November 2026, the session after the filing.
- No 2027 guidance yet. Company news on 10 November 2026 said management would not give a 2027 forecast. The high-single-digit growth framework sits well above the 4.8% organic growth of the third quarter.
- China is outside the headline growth rate. The 8-K excludes Greater China from rest-of-world organic growth because Illumina is on China's Unreliable Entities List. Investing.com tied the 29 October 2026 after-hours drop to China revenue.
- Reported revenue missed. Third-quarter revenue was $1.129 billion against a $1.154 billion estimate, according to Benzinga on 29 October 2026. Excluding tariff refunds it was $1.166 billion. The refunds cut revenue by $37 million and added about $0.18 to EPS.
- Brokers are split. Citigroup kept Sell on 2 November 2026 and raised its target to $210. JPMorgan and Evercore ISI lowered targets on 30 October 2026.
- Research budgets are a standing drag. About 44% of revenue comes from academic and government customers, and management guided research and applied consumables to fall by a mid-to-high-single-digit rate in fiscal 2026.
Price setup
Adjusted daily closes show the shares at $212.93 on 11 November 2026. That is below the 50-day average of closes and above the 200-day average of $178.93. The 3-month change is 10.5%, measured from the $192.64 close of 13 August 2026.
The path since the report is wide. The shares closed at $226.54 on 4 November 2026 and $208.00 on 5 November 2026, then rebounded to $220.78 on 9 November 2026. They then closed at $214.91 on 10 November 2026 and $212.93 on 11 November 2026. The $208.00 close of 5 November 2026 is the lowest in that run.
The shares now trade inside the range where Corvex funds sold in early September, $213.20 to $221.55 on weighted average per Form 4 filings. The 52-week closing low is $114.44 from 12 February 2026.
Catalysts ahead
- ~January 2027 (est.): J.P. Morgan Healthcare Conference, where Illumina has presented in prior years (date not confirmed by the company). Gives management its next chance to turn the 2027 framework of high-single-digit growth and at least a 25.5% operating margin into formal guidance.
- ~February 2027 (est.): Q4 fiscal 2026 report and first fiscal 2027 guidance. Shows whether the raised $4.64–$4.66 billion revenue range is delivered and whether 2027 organic growth moves above the 4.8% pace of the third quarter.
What would change the view
A daily close above $249.39, the level of the 50-day average of closes on 11 November 2026, which would show the shares leading the market again; a fiscal 2026 revenue range raised above $4.66 billion would point the same way.
What it trades with
Illumina rejoined the S&P 500 effective 21 September 2026, so index-linked flows now touch the shares. Its academic and government exposure ties it to National Institutes of Health (NIH) funding and the US federal budget cycle. Tariff policy matters directly: Illumina booked International Emergency Economic Powers Act (IEEPA) tariff refunds in the third quarter. Because China is outside its headline growth rate, US–China trade news moves the shares separately from clinical demand.
The evidence, claim by claim (8)
- Illumina raised fiscal 2026 revenue guidance to $4.64–$4.66 billion from $4.60–$4.64 billion and adjusted EPS guidance to $5.40–$5.45 from $5.30–$5.40, with a non-GAAP operating margin outlook of 23.6%. Illumina Q3 fiscal 2026 results release (Form 8-K) · as of
- Q3 fiscal 2026 reported revenue was $1.129 billion, up 4.2% year over year; excluding tariff refunds it was $1.166 billion, up 7.6%. Organic growth was 4.8%. Illumina Q3 fiscal 2026 results release (Form 8-K) · as of
- Q3 operating cash flow was $419 million versus $284 million a year earlier; free cash flow was $378 million versus $253 million. Illumina Q3 fiscal 2026 results release (Form 8-K) · as of
- Q3 reported sales of $1.129 billion compared with a $1.154 billion estimate; adjusted EPS excluding tariff refunds was $1.44 versus a $1.36 estimate. Benzinga · as of
- Director Keith Meister reported an open-market sale of 281,433 Illumina shares at $225.12–$241.42 (average $236.50) on 3 November to 4 November 2026. SEC Form 4, filed 5 November 2026 · as of
- Illumina won the SG-INSIGHT sequencing contract in Singapore covering about 450,000 residents, building on Phase II delivery of more than 100,000 genomes. Company news, 3 November 2026 · as of
- At the UBS Global Healthcare Conference, an Illumina executive said 2027 is on track for high-single-digit revenue growth and at least a 25.5% operating margin as a starting point, but gave no 2027 guidance. Company news report of the UBS conference, 10 November 2026 · as of
- Citigroup kept Sell on Illumina and raised its target to $210; Daiwa Securities raised its target to $228 from $196. Analyst notes reported 2 November 2026 and 10 November 2026 · as of
Sources
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