BUY BUY BUY BUY: Illumina Inc

July 16, 2017
NASDAQ: ILMN
ILLUMINA INC
BUY HOLD SELL
BUY
RATING SINCE 04/07/2017
A+ A A- B+ B B- C+ C C- D+ D D- E+ E E- F TARGET PRICE $199.82
Annual Dividend Rate Annual Dividend Yield Beta Market Capitalization 52-Week Range Price as of 7/13/2017
NA NA 0.83 $25.3 Billion $119.37-$189.48 $173.00
Sector: Health Care Sub-Industry: Life Sciences Tools & Services Source: S&P
Weekly Price: (US$) SMA (50) SMA (100) 1 Year 2 Years
ILMN BUSINESS DESCRIPTION
Illumina, Inc. provides sequencing and array-based 240
solutions for genetic analysis. The company's
sequencing by synthesis technology provides 220
researchers with various applications and the
ability to sequence mammalian genomes. TARGET 200
TARGET
TARGETPRICE
TARGET PRICE$199.82
PRICE $199.82
$199.82
STOCK PERFORMANCE (%) 180

3 Mo. 1 Yr. 3 Yr (Ann)
Price Change -0.40 18.60 -0.69 160
GROWTH (%) 140

Last Qtr 12 Mo. 3 Yr CAGR
Revenues 4.58 7.61 17.07 120
Net Income 309.65 78.54 52.69 Rating History
EPS 313.33 80.21 51.53 BUY HOLD BUY HOLD BUY
RETURN ON EQUITY (%) Volume in Millions

40
ILMN Ind Avg S&P 500
Q1 2017 29.01 31.04 13.16 20
Q1 2016 20.81 22.68 11.83
0
Q1 2015 26.49 20.33 13.71 2015 2016 2017
COMPUSTAT for Price and Volume, TheStreet Ratings, Inc. for Rating History
P/E COMPARISON
RECOMMENDATION
We rate ILLUMINA INC (ILMN) a BUY. This is driven by a number of strengths, which we believe should have
a greater impact than any weaknesses, and should give investors a better performance opportunity than most
stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price
performance, impressive record of earnings per share growth, compelling growth in net income, revenue
growth and largely solid financial position with reasonable debt levels by most measures. Although no
company is perfect, currently we do not see any significant weaknesses which are likely to detract from the
generally positive outlook.
34.53 51.99 24.41
ILMN Ind Avg S&P 500 HIGHLIGHTS
Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the
market's overall trend during that period and the fact that the company's earnings growth has been robust.
EPS ANALYSIS¹ ($) Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock,
despite the fact that it has already risen over the past year.
ILLUMINA INC reported significant earnings per share improvement in the most recent quarter compared to
the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth
Q4 0.70
Q2 0.69
over the past two years. We feel that this trend should continue. During the past fiscal year, ILLUMINA INC
Q1 0.60
increased its bottom line by earning $3.13 versus $3.10 in the prior year. This year, the market expects an
improvement in earnings ($3.65 versus $3.13).
Q1 0.92
Q3 0.79
Q2 0.82
Q3 0.87
Q4 0.84
Q1 2.48
The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500
2015 2016 2017 and the Life Sciences Tools & Services industry. The net income increased by 309.6% when compared to the
NA = not available NM = not meaningful
same quarter one year prior, rising from $89.59 million to $367.00 million.
1 Compustat fiscal year convention is used for all fundamental
data items. Despite its growing revenue, the company underperformed as compared with the industry average of 4.8%.
Since the same quarter one year prior, revenues slightly increased by 4.6%. Growth in the company's revenue
appears to have helped boost the earnings per share.
The current debt-to-equity ratio, 0.41, is low and is below the industry average, implying that there has been
successful management of debt levels. Along with this, the company maintains a quick ratio of 2.98, which
clearly demonstrates the ability to cover short-term cash needs.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy Report Date: July 16, 2017 PAGE 1
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2016. All rights reserved.
July 16, 2017
NASDAQ: ILMN
ILLUMINA INC
Sector: Health Care Life Sciences Tools & Services Source: S&P
NA NA 0.83 $25.3 Billion $119.37-$189.48 $173.00
PEER GROUP ANALYSIS INDUSTRY ANALYSIS

REVENUE GROWTH AND EBITDA MARGIN*
The life sciences tools and services (LSTS) industry is comprised of biotechnology companies and health
care services, supplies, and equipment companies. The industry also includes firms that provide analytical
35%
Q tools, instruments, consumables and supplies, clinical trial services, contract research services, and
FA
technology solutions. The industry is complex and categorized into eight segments: genomics, proteomics,
VO
cell biology, combinatorial chemistry, small-animal in vivo analysis, bioinformatics, and general labware.
RA
BL
Major LSTS players are Thermo Fisher Scientific (TMO), Agilent Technologies (A), Waters (WAT), and Illumina
E
(ILMN).
The industry has been historically fragmented, but recently, companies seeking expanded R&D capabilities or
economies of scale have sought consolidation and collaboration.
Revenue Growth (TTM)
Genomics research progressed in the late 1990s and the early 2000s saw the emergence of proteomics.
Currently, research and development is directed towards cell biology and animal in vivo research, which help
UN
TMO WAT
FA
ILMN ICLR to develop safer drugs by providing improved late-stage screening.

VO
MTD
RA
QGEN
BIO
BIO.B A
B
0%
More than 20% of the US population will be 65 years or older by 2050, implying increased demand for heart
LE
10% PKI 32.5% disease, diabetes, and cancer drugs. This scenario prompts LSTS companies to develop new therapies as
EBITDA Margin (TTM) well as new enzymes, chemical sensors, diagnostics and nanotechnology.
Companies with higher EBITDA margins and
revenue growth rates are outperforming companies The discovery of substitute drugs and stringent Food and Drug Administration (FDA) regulations are
with lower EBITDA margins and revenue growth entrenched problems. Failure to meet FDA regulations leads to delays in product approval, penalties, plant
rates. Companies for this scatter plot have a market closures, and loss of revenue. After the enactment of the Food and Drug Administration Modernization Act of
capitalization between $5.4 Billion and $70.4 Billion. 1997, the FDA tightened the approval procedure.
Companies with NA or NM values do not appear.
Despite rising costs and shrinking margins, industry outlook remains positive due to technology advances,
*EBITDA – Earnings Before Interest, Taxes, Depreciation and
Amortization. robust product pipeline, and sophisticated research. As the US baby boomer population ages, healthcare
spending is projected to keep growing.
REVENUE GROWTH AND EARNINGS YIELD
35%
PEER GROUP: Life Sciences Tools & Services

Q Recent Market Price/ Net Sales Net Income
FA
Ticker Company Name Price ($) Cap ($M) Earnings TTM ($M) TTM ($M)
VO
RA
ILMN ILLUMINA INC 173.00 25,258 34.53 2,424.61 740.06

BL
E
QGEN QIAGEN NV 33.75 7,624 93.65 1,347.92 82.34

PKI PERKINELMER INC 69.25 7,620 36.07 2,131.62 225.44
TMO THERMO FISHER SCIENTIFIC INC 180.03 70,431 32.85 18,744.30 2,171.00
BIO.B BIO-RAD LABORATORIES INC 224.50 6,821 238.83 2,097.03 28.26
Revenue Growth (TTM)
BIO BIO-RAD LABORATORIES INC 231.65 6,821 246.44 2,097.03 28.26

ICLR ICON PLC 99.62 5,357 20.63 1,697.92 270.62
UN
TMO A AGILENT TECHNOLOGIES INC 61.19 19,663 34.38 4,324.00 580.00

FA
ILMN
MTD WAT ICLR
VO
A Q QUINTILES IMS HOLDINGS INC 89.22 19,574 81.11 7,709.92 82.33

RA
QGEN
BIO
B
0%
LE
BIO.B MTD METTLER-TOLEDO INTL INC 603.01 15,571 39.28 2,563.15 411.16
0% PKI 5%
WAT WATERS CORP 182.74 14,626 27.86 2,190.15 533.01
Earnings Yield (TTM)
The peer group comparison is based on Major Life Sciences Tools & Services companies of comparable size.
Companies that exhibit both a high earnings yield
and high revenue growth are generally more
attractive than companies with low revenue growth
and low earnings yield. Companies for this scatter
plot have revenue growth rates between 0.6% and
31.1%. Companies with NA or NM values do not
appear.
July 16, 2017
NASDAQ: ILMN
ILLUMINA INC
NA NA 0.83 $25.3 Billion $119.37-$189.48 $173.00
COMPANY DESCRIPTION STOCK-AT-A-GLANCE

Illumina, Inc. provides sequencing and array-based Below is a summary of the major fundamental and technical factors we consider when determining our
solutions for genetic analysis. The company's sequencing overall recommendation of ILMN shares. It is provided in order to give you a deeper understanding of our
by synthesis technology provides researchers with rating methodology as well as to paint a more complete picture of a stock's strengths and weaknesses. It is
various applications and the ability to sequence important to note, however, that these factors only tell part of the story. To gain an even more comprehensive
mammalian genomes. It also offers arrays for a range of understanding of our stance on the stock, these factors must be assessed in combination with the stock’s
deoxyribonucleic acid and RNA analysis applications, valuation. Please refer to our Valuation section on page 5 for further information.
including single nucleotide polymorphism genotyping,
copy number variations analysis, gene expression FACTOR SCORE
analysis, and methylation analysis, as well as allow for
the detection of known genetic markers on a single Growth out of 5 stars 4.5
array. In addition, the company provides various library Measures the growth of both the company's income statement and weak strong
preparation and sequencing kits to simplify workflows cash flow. On this factor, ILMN has a growth score better than 80% of
and accelerate analysis; and genome sequencing, the stocks we rate.
genotyping, and non-invasive prenatal testing services. It
serves genomic research centers, academic institutions,
government laboratories, and hospitals, as well as
Total Return out of 5 stars 2.5
pharmaceutical, biotechnology, agrigenomics, Measures the historical price movement of the stock. The stock weak strong
commercial molecular diagnostic laboratories, and performance of this company has beaten 40% of the companies we
consumer genomics companies. The company markets cover.
and distributes its products directly to customers in
North America, Europe, Latin America, and the Efficiency out of 5 stars 4.5
Asia-Pacific region, as well as through life-science Measures the strength and historic growth of a company's return on weak strong
distributors. It has collaboration agreements with IBM invested capital. The company has generated more income per dollar of
Watson Health to access genome data interpretation by capital than 80% of the companies we review.
integrating Watson for genomics into Illumina's
BaseSpace Sequence Hub and tumor sequencing
process; and NRGene to develop new molecular breeding
Price volatility out of 5 stars 3.0
tools for cattle to support global food production. The Measures the volatility of the company's stock price historically. The weak strong
company also has a co-development agreement with stock is less volatile than 50% of the stocks we monitor.
Munich Leukemia Laboratory GmbH and IBM Watson
Health to build a cognitive technology prototype to help Solvency out of 5 stars 5.0
researchers improve leukemia treatment. Illumina, Inc. Measures the solvency of the company based on several ratios. The weak strong
was founded in 1998 and is headquartered in San Diego, company is more solvent than 90% of the companies we analyze.
California.
Income out of 5 stars 0.5
ILLUMINA INC
Measures dividend yield and payouts to shareholders. This company weak strong
5200 Illumina Way
pays no dividends.
San Diego, CA 92122
USA
Phone: 858-202-4500 THESTREET RATINGS RESEARCH METHODOLOGY
Fax: 858-202-4766
http://www.illumina.com TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both
price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to
perform against a general benchmark of the equities market and interest rates. While our model is
quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include
expected equities market returns, future interest rates, implied industry outlook and forecasted company
earnings. Objective elements include volatility of past operating revenues, financial strength, and company
cash flows.
Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown
as compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level of
acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings
growth; and the financial strength of the underlying company as compared to its stock's valuation as
compared to projected earnings growth; and the financial strength of the underlying company as compared
to its stock's performance. These and many more derived observations are then combined, ranked, weighted,
and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of
selecting stocks.
July 16, 2017
NASDAQ: ILMN
ILLUMINA INC
NA NA 0.83 $25.3 Billion $119.37-$189.48 $173.00
Consensus EPS Estimates² ($) FINANCIAL ANALYSIS

IBES consensus estimates are provided by Thomson Financial ILLUMINA INC's gross profit margin for the first quarter of its fiscal year 2017 has decreased when compared
to the same period a year ago. The company has grown its sales and net income during the past quarter
when compared with the same quarter a year ago, and although its growth in net income has outpaced the
industry average, its revenue growth has not. ILLUMINA INC is extremely liquid. Currently, the Quick Ratio is
2.98 which clearly shows the ability to cover any short-term cash needs. The company's liquidity has
decreased from the same period last year.
0.69 At the same time, stockholders' equity ("net worth") has greatly increased by 28.11% from the same quarter
3.65 E 4.36 E last year. Overall, the key liquidity measurements indicate that the company is very unlikely to face financial
Q2 FY17 2017(E) 2018(E) difficulties in the near future.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the
INCOME STATEMENT next 12-months. To learn more visit www.TheStreetRatings.com.
Q1 FY17 Q1 FY16
Net Sales ($mil) 598.00 571.76
EBITDA ($mil) 120.40 157.75
EBIT ($mil) 82.40 124.53
Net Income ($mil) 367.00 89.59
BALANCE SHEET
Q1 FY17 Q1 FY16
Cash & Equiv. ($mil) 1,778.00 1,343.09
Total Assets ($mil) 4,598.00 3,793.71
Total Debt ($mil) 1,056.00 1,022.65
Equity ($mil) 2,551.00 1,991.11
PROFITABILITY
Q1 FY17 Q1 FY16
Gross Profit Margin 70.90% 75.25%
EBITDA Margin 20.13% 27.58%
Operating Margin 13.78% 21.78%
Sales Turnover 0.53 0.59
Return on Assets 16.09% 10.92%
Return on Equity 29.01% 20.81%
DEBT
Q1 FY17 Q1 FY16
Current Ratio 3.49 4.31
Debt/Capital 0.29 0.34
Interest Expense 8.00 8.53
Interest Coverage 10.30 14.61
SHARE DATA
Q1 FY17 Q1 FY16
Shares outstanding (mil) 146 147
Div / share 0.00 0.00
EPS 2.48 0.60
Book value / share 17.47 13.53
Institutional Own % NA NA
Avg Daily Volume 976,746 946,199
2 Sum of quarterly figures may not match annual estimates due to
use of median consensus estimates.
July 16, 2017
NASDAQ: ILMN
ILLUMINA INC
NA NA 0.83 $25.3 Billion $119.37-$189.48 $173.00
RATINGS HISTORY VALUATION

Our rating for ILLUMINA INC has not changed BUY. The current P/E ratio indicates a significant discount compared to an average of 51.99 for the Life
since 4/7/2017. As of 7/13/2017, the stock was Sciences Tools & Services industry and a significant premium compared to the S&P 500 average of 24.41. For
trading at a price of $173.00 which is 8.7% below its additional comparison, its price-to-book ratio of 9.90 indicates a significant premium versus the S&P 500
52-week high of $189.48 and 44.9% above its average of 3.04 and a significant premium versus the industry average of 6.76. The price-to-sales ratio is well
52-week low of $119.37. above the S&P 500 average, but well below the industry average. The valuation analysis reveals that,
ILLUMINA INC seems to be trading at a discount to investment alternatives within the industry.
2 Year Chart
$250
BUY: $221.47
HOLD: $147.48
BUY: $178.02
HOLD: $126.40
BUY: $172.39
Price/Earnings 1 2 3 4 5 Price/CashFlow 1 2 3 4 5
premium discount premium discount
$200 ILMN 34.53 Peers 51.99 ILMN 31.00 Peers 31.34
• Discount. A lower P/E ratio than its peers can • Average. The P/CF ratio, a stock’s price divided by
$150 signify a less expensive stock or lower growth the company's cash flow from operations, is useful
expectations. for comparing companies with different capital
• ILMN is trading at a significant discount to its requirements or financing structures.
2015 2016 peers. • ILMN is trading at a valuation on par to its peers.
Price/Projected Earnings 1 2 3 4 5 Price to Earnings/Growth 1 2 3 4 5

premium discount premium discount
MOST RECENT RATINGS CHANGES ILMN 39.68 Peers 29.29 ILMN 1.83 Peers 0.97
Date Price Action From To • Premium. A higher price-to-projected earnings ratio • Premium. The PEG ratio is the stock’s P/E divided by
4/7/17 $172.39 Upgrade Hold Buy than its peers can signify a more expensive stock the consensus estimate of long-term earnings
12/6/16 $126.40 Downgrade Buy Hold or higher future growth expectations. growth. Faster growth can justify higher price
1/5/16 $178.02 Upgrade Hold Buy • ILMN is trading at a significant premium to its multiples.
10/19/15 $147.48 Downgrade Buy Hold peers. • ILMN trades at a significant premium to its peers.
7/13/15 $221.47 No Change Buy Buy Price/Book 1 2 3 4 5 Earnings Growth 1 2 3 4 5
Price reflects the closing price as of the date listed, if available premium discount lower higher
ILMN 9.90 Peers 6.76 ILMN 80.21 Peers 14.48
• Premium. A higher price-to-book ratio makes a • Higher. Elevated earnings growth rates can lead to
RATINGS DEFINITIONS &
stock less attractive to investors seeking stocks capital appreciation and justify higher
DISTRIBUTION OF THESTREET RATINGS
with lower market values per dollar of equity on the price-to-earnings ratios.
(as of 7/13/2017) balance sheet. • ILMN is expected to have an earnings growth rate
• ILMN is trading at a significant premium to its that significantly exceeds its peers.
43.81% Buy - We believe that this stock has the peers.
opportunity to appreciate and produce a total return of
more than 10% over the next 12 months. Price/Sales 1 2 3 4 5 Sales Growth 1 2 3 4 5
premium discount lower higher
30.69% Hold - We do not believe this stock offers ILMN 10.42 Peers 20.61 ILMN 7.61 Peers 10.11
conclusive evidence to warrant the purchase or sale of • Discount. In the absence of P/E and P/B multiples, • Lower. A sales growth rate that trails the industry
shares at this time and that its likelihood of positive total the price-to-sales ratio can display the value implies that a company is losing market share.
return is roughly in balance with the risk of loss. investors are placing on each dollar of sales. • ILMN trails its peers on the basis of sales growth
• ILMN is trading at a significant discount to its
25.50% Sell - We believe that this stock is likely to industry on this measurement.
decline by more than 10% over the next 12 months, with
the risk involved too great to compensate for any DISCLAIMER:
possible returns.
The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but
TheStreet Ratings cannot guarantee its accuracy and completeness, and that of the opinions based thereon. Data is provided
TheStreet Ratings via the COMPUSTAT® Xpressfeed product from Standard &Poor's, a division of The McGraw-Hill Companies, Inc., as well as
14 Wall Street, 15th Floor other third-party data providers.
New York, NY 10005
TheStreet Ratings is a division of TheStreet, Inc., which is a publisher. This research report contains opinions and is provided
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July 16, 2017

STOCK PERFORMANCE (%) 180

GROWTH (%) 140

RETURN ON EQUITY (%) Volume in Millions

PEER GROUP ANALYSIS INDUSTRY ANALYSIS

ILMN ICLR to develop safer drugs by providing improved late-stage screening.

PEER GROUP: Life Sciences Tools & Services

ILMN ILLUMINA INC 173.00 25,258 34.53 2,424.61 740.06

QGEN QIAGEN NV 33.75 7,624 93.65 1,347.92 82.34

BIO BIO-RAD LABORATORIES INC 231.65 6,821 246.44 2,097.03 28.26

TMO A AGILENT TECHNOLOGIES INC 61.19 19,663 34.38 4,324.00 580.00

A Q QUINTILES IMS HOLDINGS INC 89.22 19,574 81.11 7,709.92 82.33

COMPANY DESCRIPTION STOCK-AT-A-GLANCE

Consensus EPS Estimates² ($) FINANCIAL ANALYSIS

RATINGS HISTORY VALUATION

Price/Projected Earnings 1 2 3 4 5 Price to Earnings/Growth 1 2 3 4 5

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