Select Page

With the Standard & Poor’s 500 falling 2.37% at the close and the NASDAQ 100 down 3.16% for the day, shares of Illumina (ILMN) climbed 1.67%.

Yesterday and today the selling of Illumina looks to have exhausted itself. The stock traded at $400.74 as recently as August 5 and at $353.65 on September 4. But closed today at $273.00. That’s a drop of 32% from the August 5 price.

The proximate cause was Illumina’s deal to buy still private Grail for $8 billion in cash and stock.

Analysts hated the deal. No, that’s not enough. They really, really hated the deal.

Some said it was too pricy and would seriously dilute the position of Illumina shareholders.

Others said that the acquisition of a company that performed genetic testing as part of its test for early cancer detection would put Illumina, which makes genetic sequencing equipment, in competition with its customers. The deal, they continued, was a sign that Illumina was projecting a slowdown in revenue growth from the sale of its equipment and was looking for another source of growth.

I see and saw the drop as a chance to buy the 800-pound gorilla that dominates the market for genetic sequencing equipment at a substantial discount. I made Illumina a new pick  in my Jubak Picks portfolio on September 17. I certainly didn’t catch the absolute bottom–I bought at $294.74 and the price has dropped 7.38% as of today’s close from then.” (The stock was a June 16, 2020 pick in my long-term 50 Stocks Portfolio. That position is down 23.12% since that recommendation.)

But while Illumina isn’t out of the woods yet–the coronavirus pandemic is slowing equipment sales–I think we’re done with the worst of the plunge.

Full disclosure: I bought more for my personal portfolios today, September 23.