What Happened?

Shares of genomics company Illumina (NASDAQ:ILMN) fell 7.5% in the morning session after Barclays downgraded the stock to Sell and lowered the price target from $130 to $100. The firm cited several factors for the revision, including "growing uncertainty in China, rising competition from Roche in the clinical market, and weaker-than-expected elasticity in consumables demand."

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Illumina? Access our full analysis report here, it’s free.

What The Market Is Telling Us

Illumina’s shares are somewhat volatile and have had 13 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business. 

The previous big move we wrote about was 3 days ago when the stock dropped 8.6% on the news that the company reported fourth-quarter results and provided full-year revenue guidance, which fell below Wall Street's expectations. The guidance did not account for the potential impact of the China Ministry of Commerce's decision to add the company to its 'unreliable entity list.' 

On the other hand, Illumina exceeded analysts' organic revenue expectations this quarter, breaking its three-quarter streak of organic revenue declines. Its full-year EPS guidance also outperformed Wall Street's estimates. 

Zooming out, we think this was a decent quarter featuring some areas of strength but also some blemishes. However, the weak guidance and lack of uncertainty on issues in China are likely to weigh heavily on the minds of investors.

Illumina is down 20.2% since the beginning of the year, and at $104.52 per share, it is trading 32.6% below its 52-week high of $155.15 from November 2024. Investors who bought $1,000 worth of Illumina’s shares 5 years ago would now be looking at an investment worth $355.02.

Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) semiconductor stock benefiting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story.