Illumina hits 52-weeek low as Barclays downgrades noting multiple overhangs
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After a top court in the EU rejected the companyâs bid to avoid an antitrust probe over its Grail acquisition, Illumina (NASDAQ:ILMN) shares reached a 52-week low on Wednesday as Barclays downgraded the life sciences company noting multiple headwinds.
âILMN faces more overhangs than ever before, including regulatory challenges to the GRAIL merger, and incoming competition, the analyst Luke Sergott wrote lowering the recommendation to Underweight from Equal Weight and per share target to $150 from $350.
Sergott doubts if the European Commission or the Federal Trade Commission will clear the Grail deal, which, according to him, is âtrending towards unlikely.â
Illumina (ILMN) said it would appeal todayâs verdict to the Court of Justice of the European Union, the EUâs highest judicial body.
Sergott sees a tough situation if the company has to terminate the acquisition: A potential spinoff/IPO of Grail will require significant cash expenditure to make it more attractive in a weak IPO market, or Illumina (ILMN) will be forced to sell the target at a sharp discount.
Even if Illumina (ILMN) overcomes antitrust scrutiny for acquisition, Barclays projects earnings dilution as the company will have to wait until at least 2025 to achieve broad adoption/approval/ coverage for the liquid biopsy test Grail is developing.
Wall Street has remained bullish on Illumina (ILMN) stock, with an average rating of Buy from analysts. However, Seeking Alpha Author ratings and Seeking Alpha's quant system, which consistently beats the market, indicated ILMN as a Hold.