|Illumina CEO Jay Flatley|
Genomic sequencing seems to have come of age with Illumina ($ILMN) as a substantial driver and beneficiary. During the third quarter, the company achieved astonishing revenue growth of 35% to $481 million over the same quarter last year.
That's its highest growth rate since the second quarter of 2011 and its twelfth sequential quarter of revenue growth. Third quarter revenues beat the Street expectation of $451 million, while adjusted earnings per share for the quarter of $0.77 beat the consensus of $0.56.
In addition to the revenue and earnings beat for the quarter, Illumina raised its 2014 revenue growth guidance to about 30%, from the previously stated 25% to 26%. It also increased its 2014 EPS guidance range to $2.63 to $2.65, from the prior $2.26 to $2.28.
Investors applauded, sending Illumina shares up as much as 10% in early trading on the news.
Illumina CEO Jay Flatley attributed the revenue momentum to record growth of 47% year-over-year in sequencing consumables and an increase in sequencing instrument revenue of 55%. The latter was "fueled by demand by HiSeq X Ten and the NextSeq 500," he said on a conference call.
Flatley doesn't expect this pace to slow substantially anytime soon, although he does expect fewer HiSeq X system shipments in the fourth quarter. He added, "It should be noted, however, that we have a substantial backlog of instruments and a strong funnel of opportunities, which we believe will sustain shipments of this configuration of HiSeq Xs through mid-2015.
Last quarter, Illumina launched new reagent kits for both the HiSeq X and the HiSeq 2500 Sequencing Systems. It also started a partnership with AstraZeneca ($AZN), the Janssen business of Johnson & Johnson ($JNJ) and Sanofi ($SNY) to develop a universal next-generation sequencing oncology test system. And it did a £78 million ($126 million) deal with Genomics England to sequence 100,000 genomes.
"Our Q3 results exceeded our elevated expectations. With the most powerful and well positioned sequencing portfolio available, we're witnessing a robust uptick of our products and expansion into new markets," summed up Flatley. "Our focus on research, development and overall innovation is stronger than ever and looking ahead we expect to deliver a significant growth as we unlock the power of the genome."
Illumina is up 62% year-to-date and almost 275% in the last two years.