Illumina Earnings: Mildly Better Than Expected and 2024 Outlook Maintained

Illumina announced first-quarter results that were slightly stronger than anticipated, and maintained its guidance for the year. At first glance, we do not plan to change our $228 per share fair value estimate, and shares continue to trade well below what we think the legacy business is worth, excluding Grail, which is $180 per share. Our moat rating on Illumina remains narrow, relating primarily to the intangible assets and switching costs in sequencing. As a reminder, Illumina plans to divest liquid biopsy maker Grail through a third-party or capital market transaction by late 2024, with terms to be settled by midyear.