Shares of Illumina Inc. (NASDAQ:ILMN) dropped 3.8% on Wednesday after Citi downgraded the stock from Neutral to Sell, warning that the company’s outlook for the latter half of the year may be overly optimistic.
Citi analyst Patrick Donnelly cut his price target from $85 to $80, suggesting a potential downside of nearly 20% from Tuesday’s closing price of $99.27. The downgrade arrives just ahead of Illumina’s upcoming earnings announcement.
Although Donnelly expects second-quarter results to meet expectations, he expressed doubt that Illumina can deliver on its full-year projections. He cited sluggish demand for consumables, particularly in the academic sector, and ongoing challenges in China as key risks to the company’s performance.
“We are cautious into the print as we see risk to the stock if they cut the guide (for EPS this would be the third time this year) with numbers risk presenting itself if they do not cut the guide (with the view that 2H risk remains),” Donnelly wrote in a note to clients.
The analyst’s remarks point to a no-win scenario: if Illumina lowers its guidance again, it would mark the third EPS revision this year, which could erode investor confidence. However, maintaining current projections could also backfire if the company falls short amid ongoing macro pressures.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.