5

growth

Outperform - Price 84.10 on July 23
by Cowen & Co.

Illumina develops genetic-research technology and kits. Its monster Q2 beat demonstrates the power of its revenue model. Q2 sales of $140 million (+66% year/over/year) beat consensus by $10 million, and EPS...of 44 cents (+51% y/o/y) beat expectations by five cents. The midpoint of full-year sales guidance was increased by $30 million. Sources of revenue upside abound -- including...the Genome Analyzer sequencing system, [which] enables even small labs to have the sequencing capabilities of the largest genome centers. Market cap: $5.3 billion.

Another selection, Illumina (ILMN), makes expensive gene-sequencing machines, along with the reagents they use. These are sold to research labs and clinical trial organizations to facilitate "personalized medicine," by testing the efficacy of various drugs on people with slight genetic differences. While competitors offer partial systems, Oberweis believes that Illumina "has brought together the broadest array of genetic analysis technologies under one roof." In the first quarter, revenue rose 69%, to about $122 million, while net came in at 21 cents a share, versus a year-earlier loss attributable to a one-time charge.

Illumina (ILMN) upgraded to Buy rating from Neutral at UBS. Price target jumps to $85 from $62 and FY 2008 eps estimates bump to $1.26 from $1.25.

like the technology

research

tech

sure & steady

Target: $75