Illumina Puts Up Yet Another Glowing Quarter

Illumina (ILMN) blew out consensus expectations for the third quarter on Monday, with revenue of $481 million and earnings of $93 million, or $0.77 per share. Analysts expected revenue of $451 million and EPS of just $0.55.

The company increased yet again its full year 2014 guidance for non-GAAP earnings of $2.63 to $2.65 per share, and ILMN jumped 10% in after-hours trading on Monday.

It was a stunning quarter for Illumina, furthering our longstanding view that paying up for this company's growth has been worthwhile for more than two years. PropThink reiterated this stance just last month: Paying Up for Illumina’s Growth was the Right Move 140 Points Ago: It Still IsMonday's beat and raise should serve to solidify this view: Illumina's not going anywhere. Recall that the company entered into strategic partnerships with pharma powerhouses AstraZeneca (AZN)Janssen (JNJ), and Sanofi (SNY) in the quarter to develop a universal NGS-based oncology test during the quarter.

“Illumina experienced tremendous momentum in the third quarter, with strong shipments in HiSeq X, NextSeq and MiSeq, as well as the associated consumables, resulting in record financial results," said Jay Flatley, CEO.

Illumina generated free cash flow of $117 million for the quarter on gross margins of 73.7%; this is improved from 70.2% in the year-ago quarter. Operating margins rose as well to nearly 40% as Illumina continues to leverage its operating expenses and make targeted investments in its business. With the annual meeting of the American Society for Human Genetics (ASHG) now underway in San Diego (October 18-22), Illumina and its competitors are showcasing their newest sequencing offerings, and the forum should serve as yet another opportunity for Illumina to demonstrate its dominance of the sequencing market. And, the company’s recent foray into the sequencing startup sector is poised to yield long-term dividends.

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