Value
3.3/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 3.8 |
| P/S | 5.9 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 3.6 |
| PEG | 3.6 |
| Analyst target | 3.0 |
- ▸Forward P/E: 31.8x
- ▸PEG: 3.21
ILMN · Why this verdict
Why Illumina (ILMN) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score5.1/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Net margins of 19%, a return on equity of 34%, and a financial health score of 8 out of 9 reflect a business with strong profitability, sound balance sheet management, and operating efficiency that ranks best-in-class relative to peers. Quality | Return on equity remains above 25% and net margins hold above 15% over the next four reported quarters, sustaining the quality premium. | →Stable |
| CounterThe combined growth and profitability score (Rule of 40 at 24) falls below the 40-point threshold typically associated with software businesses able to sustain premium multiples, suggesting the quality metrics may not be sufficient to justify the current valuation without re-acceleration in revenue growth. | ||
The company has beaten consensus earnings estimates in each of the last four consecutive quarters, with average outperformance of nearly 13% above expectations — a consistent pattern of delivering results above what analysts anticipated, most recently in April 2026. Catalyst | EPS continues to exceed consensus estimates in each of the next two quarters, sustaining the track record of consistent outperformance. | →Stable |
| CounterThe margin of outperformance has narrowed from over 17% in the oldest of the four quarters to 9% in the most recent, which may indicate that estimates are catching up to the company's actual trajectory — reducing the runway for further positive surprises. | ||
Sequencing-related revenue represents 92% of total revenue, creating material concentration risk — a slowdown, competitive disruption, or technology transition in that single segment could materially impair the overall business even if other areas perform well. Bear case | Revenue from segments outside the dominant product line grows to represent at least 15% of total revenue over 12 months, meaningfully reducing the concentration. | →Stable |
| CounterHigh concentration in one category can also reflect genuine market leadership in that category; if the underlying sequencing market continues to grow, concentration in the leading product may be a strength rather than a vulnerability. | ||
A forward price-to-earnings ratio of 28 times and a price-to-earnings-to-growth ratio of 2.93 place the stock at a premium that leaves little room for estimate disappointment — the current price has already moved past the analyst-derived target, and the risk/reward geometry does not support the current entry. Key risks | The forward multiple compresses below 20 times as earnings growth accelerates to close the gap between price and intrinsic value, restoring a more balanced risk/reward. | →Stable |
| CounterPremium multiples can be sustained or expanded when earnings consistently exceed expectations — four straight beats suggest the company may be under-promising and over-delivering, which can justify a persistent multiple premium above what the trailing growth rate alone would imply. | ||
Net margins of 19%, a return on equity of 34%, and a financial health score of 8 out of 9 reflect a business with strong profitability, sound balance sheet management, and operating efficiency that ranks best-in-class relative to peers.
→StableQuality
- Expectation
- Return on equity remains above 25% and net margins hold above 15% over the next four reported quarters, sustaining the quality premium.
CounterThe combined growth and profitability score (Rule of 40 at 24) falls below the 40-point threshold typically associated with software businesses able to sustain premium multiples, suggesting the quality metrics may not be sufficient to justify the current valuation without re-acceleration in revenue growth.
The company has beaten consensus earnings estimates in each of the last four consecutive quarters, with average outperformance of nearly 13% above expectations — a consistent pattern of delivering results above what analysts anticipated, most recently in April 2026.
→StableCatalyst
- Expectation
- EPS continues to exceed consensus estimates in each of the next two quarters, sustaining the track record of consistent outperformance.
CounterThe margin of outperformance has narrowed from over 17% in the oldest of the four quarters to 9% in the most recent, which may indicate that estimates are catching up to the company's actual trajectory — reducing the runway for further positive surprises.
Sequencing-related revenue represents 92% of total revenue, creating material concentration risk — a slowdown, competitive disruption, or technology transition in that single segment could materially impair the overall business even if other areas perform well.
→StableBear case
- Expectation
- Revenue from segments outside the dominant product line grows to represent at least 15% of total revenue over 12 months, meaningfully reducing the concentration.
CounterHigh concentration in one category can also reflect genuine market leadership in that category; if the underlying sequencing market continues to grow, concentration in the leading product may be a strength rather than a vulnerability.
A forward price-to-earnings ratio of 28 times and a price-to-earnings-to-growth ratio of 2.93 place the stock at a premium that leaves little room for estimate disappointment — the current price has already moved past the analyst-derived target, and the risk/reward geometry does not support the current entry.
→StableKey risks
- Expectation
- The forward multiple compresses below 20 times as earnings growth accelerates to close the gap between price and intrinsic value, restoring a more balanced risk/reward.
CounterPremium multiples can be sustained or expanded when earnings consistently exceed expectations — four straight beats suggest the company may be under-promising and over-delivering, which can justify a persistent multiple premium above what the trailing growth rate alone would imply.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Four consecutive earnings beats averaging nearly 13% above consensus, best-in-class margins, a 34% return on equity, and a near-perfect financial health score make the quality case compelling — but revenue heavily concentrated in a single technology segment, reliance on single-source suppliers, and a forward earnings multiple above 28 times leave the risk/reward thin at the current price with the stock already past its analyst-derived target.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 5.8 |
| Gross margin | 9.7 |
| Op margin | 7.3 |
| Net margin | 9.7 |
| Current ratio | 6.2 |
| FCF quality | 7.0 |
| Moat | 6.4 |
| Rule of 40 | 3.0 |
| Piotroski F | 8.9 |
- ▸Excellent ROE: 34%
- ▸Strong margins: 19%
- ▸Rule of 40: 24 (fail)
- ▸Strong Piotroski F-Score: 8/9
Growth
3.5/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.7 |
| EPS growth | 3.2 |
Momentum
8.0/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 6.2 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 8.5 |
| Analyst rating | 7.5 |
| Price target | 2.4 |
- ▸LLM news sentiment: +0.70 (n=2)
- ▸Below analyst target
Insider
3.0/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 2.0 |
| insider conviction | 2.0 |
| holder change | 5.1 |
- ▸Heavy insider selling — $155,840,556 (0.546% of mkt cap)
Peer rank
4.0/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.2 |
| quality rank | 8.8 |
| growth rank | 2.8 |
- ▸Superior ROE vs peers
- ▸Best-in-class margins
Technical
3.8/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.0 |
| support resistance | 0.2 |
| 52w position | 9.9 |
| gap | 5.0 |
Risk (lower is worse)
5.3/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.0 |
| days to cover | 5.7 |
| volatility | 3.3 |
| put call | 8.5 |
| implied vol | 4.4 |
| beta | 5.1 |
| debt equity | 5.3 |
- ▸Concentration risks: 2 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 8.9 |
| news activity | 6.0 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position. | News modifier +2 (SELL_IF_HOLDING → HOLD_IF_HOLDING).
Engine technical detail
verdict_path:
L4:PATH_F_SELL|L3:NEWS_MOD=+2Passed (5)
- MOMENTUM:8.0>=5.5
- NEWS_BOOST:ANALYST:0.70
- EARNINGS_PROXIMITY:27d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-1.8=NEGATIVE
Warning (2)
- INSIDER:0.55%=MODERATE
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-1.79
Upside
-26.9%
Downside
15.0%
Sizing output
AVOID
SetupBreakout — Golden cross, above all MAs, RSI 68, MACD bullish
EdgeCatalyst-Driven — Earnings in 27d with 4/4 beat streak
SuitabilityAggressive — Beta 1.47>1.3
Investment implication
The F-path SELL output reflects an overall score of 5.1 below the 5.4 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Momentum at 8.0) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-1.8=NEGATIVE) reinforce the read. Current asymmetry R:R is -1.79 — supplementary context, not the trigger for this path.
The strongest dimensions are Momentum at 8.0, Quality at 7.4, and Catalyst at 7.0; the weakest are Insider at 3.0, Value at 3.3, and Growth at 3.5. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of -1.79 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Perfect Four Quarter Beat Streak
Trip ifEPS falls below consensus in 2 consecutive quarters, breaking the four-quarter beat streak.
- P2High Quality Margins And Returns
Trip ifReturn on equity falls below 15% for 2 consecutive reported quarters, a material decline from the current 34% level.
- P3Product Revenue Concentration Risk
Trip ifRevenue from non-sequencing segments grows to represent more than 20% of total revenue, reducing sequencing concentration below 80%.
- P4Rich Valuation Limits Upside
Trip ifForward price-to-earnings ratio compresses below 20x, indicating the valuation premium has meaningfully resolved.