(ILMN) Illumina - Ratings and Ratios

Naval here. Illumina, ticker symbol ILMN on the NASDAQ, is the dominant player in the next-generation sequencing space. They’re the ones who made genomics accessible at scale, driving down the cost of sequencing exponentially over the past two decades. Their technology underpins nearly every major genomics breakthrough, from the Human Genome Project to modern-day personalized medicine.

The company operates in two main segments: Core Illumina and GRAIL. Core Illumina focuses on their flagship sequencing and array-based products—think instruments like the NovaSeq, which is the workhorse of modern genomics labs. These machines are paired with consumables like flow cells and reagents, which are high-margin recurring revenue streams. They also offer targeted sequencing kits that allow researchers to zero in on specific genes or regions of interest, which is critical for everything from cancer research to agricultural genomics.

GRAIL, which Illumina acquired, is their foray into early cancer detection. The Galleri test is a game-changer—it’s a multi-cancer screening tool that can detect cancer signals in the blood earlier than traditional methods. This is a massive market opportunity, as early detection improves outcomes and reduces healthcare costs. They’re also working on minimal residual disease (MRD) detection, which helps determine if cancer treatments have been fully effective.

Financially, Illumina trades at a market cap of ~$19.5 billion. The P/S ratio is 4.44, which reflects the premium investors place on their recurring revenue model. The forward P/E is 27.93, indicating expectations of strong future growth. The company has a P/B ratio of 9.31, which is high but justified given their dominance in a rapidly growing field.

As an investor, what matters is their moat. Illumina’s technology is deeply entrenched in the genomics ecosystem. Their instruments are often a one-time purchase for labs, but the consumables create a sticky, high-margin revenue stream. They’re also at the forefront of innovation, with continuous improvements in sequencing speed, cost, and accuracy. This makes them a critical enabler of the entire genomics and precision medicine ecosystem.

Long-term, the tailwinds are strong. Genomics is becoming more integrated into healthcare, from cancer treatment to rare disease diagnosis. Illumina’s position at the center of this ecosystem gives them a unique advantage. They’re not just a tool provider; they’re a foundational layer of the entire genomics revolution.