There is still some upside potential

10/06/2017 | 02:09pm

The timing appears opportune to go long in shares of Illumina as we anticipate another pick-up in the underlying trend.

Summary

● The company has strong fundamentals. More than 70% of listed companies have a lower mix of growth, profitability, debt and visibility criteria.

● In a short-term perspective, the company has interesting fundamentals.


Strengths

● Margins returned by the company are among the highest on the stock exchange list. Its core activity clears big profits.

● Thanks to a sound financial situation, the firm has significant leeway for investment.

● There is high visibility into the group's activities for the coming years. Outlooks on future revenues from analysts covering the equity remain similar. Such hardly dispersed estimates support highly predictable sales for the current and upcoming fiscal years.

● Historically, the company has been releasing figures that are above expectations.

● Analysts remain confident with respect to the group's activity and, more often than not, have revised upwards their earnings per share estimates.

● For the last twelve months, analysts have been gradually revising upwards their EPS forecast for the upcoming fiscal year.

● The stock is in a well-established, long-term rising trend above the technical support level at 160.42 USD


Weaknesses

● Stock prices approach a strong long-term resistance in weekly data at USD 210.72.

● Based on current prices, the company has particularly high valuation levels.

● The company's valuation in terms of earnings multiples is rather high. Indeed, the firm is getting paid 38.2 times its estimated earnings per share for the ongoing year.

● The appreciation potential seems limited due to the average target prices set by the analysts covering the stock.

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