Table of Contents

Quick Stock Overview
Illumina by the numbers.

1. Executive Summary
A brief discussion of Illumina and its potential appeal to value investors.

2. Extended Summary
A more detailed explanation of Illumina's business and competitive position.

3. The Next Level of Genetics
Why Genomics is the next big thing.

4. The Illumina Revolution
How Illumina makes genomics happens, and its quasi-monopoly over the sector.

5. Illumina's Future
The growth of existing markets and many new applications.

6. Litigation and Financial Results
Grail botched acquisition, falling stock price, and persistent company quality.

7. Conclusion

Quick Stock Overview

Ticker: ILMN

Key Data

• Industry: Healthcare/Diagnostics & Research

• Market Capitalization ($M): 31,328

• Price to sales: 6.6

• Price to Free Cash Flow: 591

• Dividend yield: -

• Sales ($M): 4,693

• Free cash flow/share: 0.34

• P/E: –

1. Executive Summary

A revolution is coming in medicine, unnoticed by the general public. This has to do with the exploration of the genetic makeup of organisms and people: what is called a “genome”.

The cost of sequencing an entire genome has fallen from billions of dollars to a mere $600 in the last decades.

This opens the door to countless new medical and industrial applications for genomics. This new field of science is now a gold rush for pharmaceutical companies, all hoping to use it to solve previously incurable diseases.

One company stands as a quasi-monopoly in providing the tools needed to make it happens.

Illumina is the pioneer and leader of genomics, and build the field from scratch since the late 90s.

The company has a strong substitution cost moat. It also has a powerful flywheel in its business model allowing it to compound on its previous successes.

The company’s stock is nevertheless down 60% from its highs, due to a recent crash in growth tech stocks. In addition, a troubled acquisition of a previous Illumina spin-off has caused uncertainty, litigation, anti-trust investigations, and the first financial losses in 10 years.

These troubles are likely a one-off situation, which has not damaged the long-term prospects of the company.

With Illumina’s price-to-sales ratio at the lowest point in a decade, this might be a great entry point for a high-quality company holding the keystone technology of a quickly growing new sector.