Illumina, Inc. (ILMN): what the price assumes

Generated: 2026-07-29 · Exported: 2026-08-01 · Source: https://boothcheck.com/report/ILMN

Headline

Field	Value
Ticker	ILMN
Company	Illumina, Inc.
Current price	$191.77/sh
Composition	Consumables 74% / Instruments 11% / Service and other revenue 15%

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

Field	Value
Inversion basis	whole-company
Operating margin (value-band context)	32.0%
Operating margin today	19.4%
Margin expansion (value-band)	+12.6pp
Must persist for	9.9y
Multiple paid	35x operating income

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 10.7% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~2 years.

Reconcile: at the x-ray's 9.3% required return this reads ~7.1 years; the models below use their own rates.

How unusual the bet is: elevated

Reference	Value
vs own history	+0.38σ
cohort percentile (of 190 peers)	63
sustained it ~9.9 years at this level	14%
implied end-window share	0%

Valuation X-Ray

Every valuation family lands below the price. The price therefore sits beyond what those standard frames encode.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Family	Median price/FV	Models	Reads
Asset	3.20x	5	expensive
Earnings	3.09x	4	expensive
Relative	1.57x	5	expensive
Growth	1.48x	3	expensive

Families that call it expensive: Asset, Earnings, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.2%); the inversion above states its own rate.

Per-Model Detail (n=17)

Model	Family	FV	Price/FV	Applicable	Methodology
DCF Perpetual Growth	Growth	$77.42	2.48x	yes	FCF base $1.0B, growth 1% (input: historical growth), terminal g 1.3%, WACC 9.1%, 5yr projection
DCF Exit Multiple	Growth	$157.67	1.22x	yes	Exit EV/EBITDA: 25.3x / 27.3x / 29.3x (bear / base = today's held flat / bull), 5yr
Relative Valuation	Relative	$122.12	1.57x	yes	P/E 22.99x (blended: static sector reference 18x + trailing (TTM) 35x), scenarios: 19.5x / 23.0x / 26.5x (bear / base = reference held flat / bull), EV/EBITDA 16.58x
Simple DDM	Growth	—	—	no	—
Two-Stage DDM	Growth	—	—	no	—
Simple Excess Return	Asset	$59.88	3.20x	yes	BV/sh $17.38, ROE (TTM) 31.9%, ke 9.3%
Two-Stage Excess Return	Asset	$116.11	1.65x	yes	5yr excess ROE then converge to ke=9.3%
Discounted Future Market Cap	Growth	$129.45	1.48x	yes	Rev $4.4B, growth 1% (input: historical growth; tapered), Terminal P/S: 5.7x / 6.7x / 7.7x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair Value	Relative	$173.82	1.10x	yes	EPS $5.50, growth 32% (input: historical EPS growth), PEG=1.10 (Fair)
Margin Trajectory	Growth	—	—	no	—
Earnings Power Value	Earnings	$0.01	19176.50x	yes	Normalized EBIT (5y avg op income, one-time charges added back) $0.06B × (1−15%) / WACC 9.1% → EPV (no growth) (excluded from median)
Residual Income	Asset	$92.13	2.08x	yes	BV $17.38 + 5yr PV of (ROE (TTM) 31.9% − Kₑ 9.3%) × BV; BV grows 8.8%/yr
Graham Number	Asset	$46.37	4.14x	yes	√(22.5 × EPS $5.50 × BVPS $17.38) — Graham's conservative floor
EV/EBITDA Relative	Relative	$82.42	2.33x	yes	EBITDA $1.10B × sector EV/EBITDA 12.0x
FCF Yield	Earnings	$64.77	2.96x	yes	FCF $974.0M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF Yield	Earnings	$46.38	4.13x	yes	SBC-adj FCF $0.71B (FCF $0.97B − SBC $0.26B) capitalized at Kₑ
Ben Graham Formula	Earnings	$177.47	1.08x	yes	EPS $5.50 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/B	Asset	$10.49	18.28x	yes	BV $17.38 × (ROIC 5.5% / WACC 9.1%)
P/Sales Sector	Relative	$71.31	2.69x	yes	Revenue $4.39B × sector P/S 2.5x
PEG Fair Value	Relative	$206.25	0.93x	yes	EPS $5.50 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x
Earnings Yield	Earnings	$59.46	3.23x	yes	EPS $5.50 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations Multiple	Relative	—	—	no	—
Clinical Phase NPV	Growth	—	—	no	—
Merton	Asset	—	—	no	—
V5 Mechanical	—	—	—	no	—

Solvency

Field	Value
Net debt	$433.0m
Net debt / NOPAT (after-tax)	0.60x
Net debt / operating income (pre-tax)	0.51x
Interest coverage	8.5x
Share count CAGR (buyback)	-0.8%
Burning cash	no

Bullet Takeaways

• Illumina sells DNA-sequencing machines and the consumables they run on, a razor-and-blade model where the consumables, used every time a sample is sequenced, are the recurring revenue that matters more than the instruments.
• The risk is the price against the demand cycle: at about 31 times operating income the market is paying for growth at the company's self-funding ceiling to persist for roughly nine years, while total revenue has been roughly flat as research customers pull back.
• Watch the clinical-versus-research split; clinical consumables grew 20% ex-China in Q4 2025 even as the research market stayed muted, and that divergence is the whole story right now.

Bull Case

The counterintuitive fact about Illumina is that the flat top line hides an accelerating business. Total revenue has been roughly flat to slightly down, which reads like a company in decline, but underneath that, clinical consumables grew 20% ex-China in the fourth quarter of 2025. The flat headline is the average of a research market in retreat and a clinical market compounding fast, and the clinical side is the one that monetizes the installed base for decades. Management guides the clinical business to double-digit to mid-teens growth in 2026 while acknowledging the research segment stays muted. A company whose fastest-growing, highest-recurring segment is being masked by a cyclical drag in a different segment is exactly the kind of mispricing the headline number invites.

The model is why that clinical growth is so valuable. Illumina sells the sequencers, but the money is in the consumables that customers buy every time they run a sample. Its 10-K describes an ecosystem where "A large and dynamic Illumina user community has published hundreds of thousands of customer-authored scientific papers using our technologies", which is the switching cost in plain sight: a lab that has built its protocols, its published results, and its staff training around Illumina chemistry does not casually move to a competitor's platform. Once a NovaSeq X is installed, it pulls a stream of consumables revenue for years, and the transition to the higher-throughput X system, which drove Q1 2026 results through stronger-than-expected placements, expands that razor base.

The balance sheet and capital discipline round out the case. Net debt is only about $433 million, roughly half a year's operating income, with interest covered more than eight times over, so this is a financially sound company, not a turnaround leaning on leverage. The share count has edged lower, and management has been clear about the trajectory: the CEO has said the company expects 2026 to look better than 2025 and 2027 to look better than 2026. Layered on top is the multiomics expansion through the SomaLogic acquisition, broadening what the installed base can be sold. The bull case is that the dominant platform in genomics is being valued on a depressed research cycle while its clinical engine quietly compounds.

Bear Case

The question for Illumina is whether the current earnings are a base to grow from or a level to defend, and the demand cycle argues for caution. The research market, a large share of Illumina's customers, has been pulling back: the 10-K notes that "some customers, specifically research customers, continue to manage inventory and capital more conservatively", and that softness sits against NIH funding uncertainty that pressures the academic and government labs that buy sequencing capacity. When a meaningful slice of demand is tied to public research budgets, the company does not control its own volume, and a funding squeeze becomes a revenue squeeze. China compounds the problem, where export restrictions and local competition have weighed on what was once a growth market. Flat total revenue is the symptom: the demand cycle has turned against the research and China pieces at the same time.

That cyclical pressure runs into competition that is closing the gap. Illumina's filing warns plainly that "Some of our competitors have, or will have, substantially greater financial resources", and the sequencing market has drawn well-funded rivals offering instruments aimed at the same biological questions. The installed-base moat is real, but it erodes at the edges every time a competitor wins a new placement, because that placement pulls a decade of consumables to a rival platform instead of to Illumina. In China specifically, domestic sequencing companies have taken share that may not come back even if export rules ease. A dominant franchise facing better-capitalized competitors in a slowing market is the classic setup for margin and growth disappointment.

The valuation leaves no room for any of that to go wrong. At about $162 (June 27, 2026) the market pays roughly 31 times operating income, embedding growth at the company's self-funding ceiling for about nine years, a persistence only about one in five comparable fast-growers has achieved. Every family of valuation method lands below the price: asset, earnings-power, peer-multiple, and even forward-growth approaches all say richly valued. When no method reaches the price, the market is paying for an outcome beyond what any standard frame supports. Current operating margin is about 19%, and the price implies that climbing toward 27% and holding for years. The balance sheet is sound, so this is not a solvency bear; it is a valuation-against-the-cycle bear. If the research recovery is slower than the bulls hope, or competition keeps taking placements, the multiple compresses toward where the methods sit, and the de-rating is the loss even before earnings fall.

Valuation

What the price assumes is a long runway. At about $162 Illumina trades near 31 times operating income, and inverting that says the market is paying for operating growth held at the company's self-funding ceiling for roughly nine years. The near-term rate is within what Illumina has delivered in good years; the stretch is the duration, because only about one in five comparable fast-growers has sustained that pace for nine years. The reason the bar is so high is the current margin: operating margin sits near 19%, and the price implies it expanding toward 27% and staying there, a doubling-down on both growth and profitability at the same time.

The methods we use to triangulate are unanimous, and they all say expensive. Asset-based methods land well below the price because book value does not capture the franchise. Earnings-power approaches, which capitalize current profit, sit low because reported operating income against a large enterprise value implies a rich multiple. Peer multiples, drawn from precision-instrument and life-science tools companies, put it below the price too. Even the forward-growth methods, which usually justify a premium franchise, do not reach the current level. When every family lands below the price, the market is paying for an outcome beyond what any standard method can frame, which here means the durability of the genomics franchise far past what the visible numbers support. The peer cohort, instrument and tools makers, is a useful adjacency but an imperfect comp, because none of them has Illumina's consumables-pull economics, so the premium is partly the market crediting a better business model and partly crediting growth that has not yet appeared in the consolidated line.

Solvency is the one place there is no concern. Net debt of about $433 million is roughly half a year's operating income, interest coverage runs above eight times, and the share count has been falling. That removes balance-sheet risk from the equation entirely; nothing forces Illumina's hand in a downturn. What bounds the downside is not the balance sheet but the distance between the price and where every valuation method lands. The buyer at this price is underwriting a market leader whose clinical engine is strong and whose research and China exposure is weak, at a multiple that requires the strong part to carry the whole company at an unusual pace for the better part of a decade.

Catalysts

The recent results show the two-speed business. For fiscal 2025, Illumina guided to roughly flat constant-currency revenue, 0% to 2%, and in the fourth quarter the CEO highlighted 20% growth in clinical consumables revenue ex-China even as total growth stayed muted. Q1 fiscal 2026 was stronger, with revenue up 4.8% driven by better-than-expected NovaSeq X placements and clinical consumables demand, and the company lifted its 2026 EPS outlook. Total revenue guidance for 2026 is $4.52 billion to $4.62 billion, with the clinical business guided to double-digit to mid-teens growth and the research segment expected to stay soft.

Two external developments frame the next few quarters. China is the swing factor: export restrictions and NIH funding uncertainty have pressured demand, and any easing of China trade tensions would directly help a business that has lost share there. On strategy, the GRAIL spin-off completed in Q2 2024 simplified the company, and the SomaLogic acquisition expanded the multiomics portfolio, broadening the menu sold into the installed base. The events to watch are each quarter's clinical-versus-research split and any concrete change in China access, because together they decide whether the clinical strength can outrun the research and China drag.

Peer Cohorts (Per Segment, With Filing Citations)

Core Illumina (reported)

• TXG (10x Genomics, Inc.)
• FY2025 10-K: …expanding suite of products, which allow our customers to interrogate biological systems at previously inaccessible resolution and scale. Our products have enabled researchers to make fundamental discoveries across multiple areas of biology, including oncology, immunology and neuroscience. Since launching our first…
• FY2025 10-K: 2023, the Company filed a request for a preliminary injunction in the Dusseldorf Local Division of the UPC alleging that the Curio Seeker Spatial Mapping Kit and associated products and services infringe EP Patent No. 2697391 (the "EP 391 patent"). In April 2024, the UPC granted the Company's request and issued a…
• A (AGILENT TECHNOLOGIES, INC.)
• FY2025 10-K: …2024 increased by $86 million or 10 percent when compared to 2023 on a revenue increase of $91 million. 53 Applied Markets Our Applied Markets segment provides application-focused solutions that include instruments and software that enable customers to identify, quantify and analyze the physical and biological…
• FY2025 10-K: B. Unresolved Staff Comments None. Item 1C . Cybersecurity Agilent is committed to maintaining a secure environment for our data, complying with applicable legal requirements, and effectively supporting our business objectives and customer needs. Our cybersecurity strategy emphasizes the cultivation of a…
• TMO (THERMO FISHER SCIENTIFIC INC.)
• FY2025 10-K: …at all career levels, from online learning for all colleagues through Thermo Fisher University, to focused trainings for managers at various experience levels, to our Global Leadership Program for executives. We also support our colleagues' career advancement through our tuition reimbursement program. In a company…
• FY2025 10-K: …realization, reduced costs resulting from implementing continuous improvement methodologies, global sourcing initiatives, a lower cost structure following restructuring actions including headcount reductions and consolidation of facilities, and low cost region manufacturing. Notable Recent Acquisitions On July 10,…
• BIO (Bio-Rad Laboratories, Inc.)
• FY2025 10-K: …net sales. For each location for which procedures were performed, we evaluated the design and tested the operating effectiveness of certain internal controls related to the Company's net sales processes for the selected revenue streams. We performed a software-assisted data analysis to test relationships among…
• FY2025 10-K: …in the interactive data file because its XBRL tags are embedded within the inline XBRL document. 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy…
• BRKR (BRUKER CORPORATION)
• FY2025 10-K: …more of the following and have a material impact on our business or consolidated results of operations and financial position: (i) loss of patent protection; (ii) inability to continue to engage in certain activities; (iii) payment of significant damages, royalties, penalties, and/or license fees to third parties;…
• FY2025 10-K: …executive leadership and the Audit Committee. We also engage specialized third-party consultants to proactively support our cybersecurity efforts, which include, but are not limited to, application and network security, information risk management, as well as business continuity and disaster recovery. Cybersecurity…
• RVTY (REVVITY, INC)
• FY2025 10-K: …cell contamination throughout bioprocessing workflows. 8 Table of Contents Brand Names: Our Life Sciences segment offers additional products under various brand names: Accell™, AlphaLISA ® , AlphaPlex ™ , AlphaScreen ® , Alpha™ SureFire ® , AssayMate™, BIOCHIPs™, BioLegend ® , Bioo Scientific ® , BioQule™, Brilliant…
• FY2025 10-K: …reagents and kits for cell counting assays and cell viability, microplates, slides, and counting beads. ◦ The Cellaca ® PLX™ image cytometry system combines best-in-class image cytometer hardware, software, validated consumables and optimized reagent kits with validated antibodies from our BioLegend business, and…
• WAT (Waters Corporation)
• FY2025 10-K: …control and proficiency testing and purchase product support services required to help with their federal and state mandated accreditation requirements or with quality control over critical pharmaceutical analysis. Waters HPLC columns can be used on Waters-branded and competitors' LC systems. The Company believes…
• FY2025 10-K: …technical support representatives work directly with customers, providing them assistance with applications and procedures on Company products. The Company provides customers with comprehensive information through various corporate and geographic-specific internet websites and product literature and also makes…
• MTD (Mettler-Toledo International Inc.)
• FY2025 10-K: …to mitigate these risks. The Audit Committee of the Board of Directors reviews the results of the enterprise risk assessment in detail with management on an annual basis and reports on its review to the Board of Directors each year . We provide a comprehensive update to the Board of Directors on cybersecurity at…
• FY2025 10-K: …example, we pursue several goals related to supply chain transparency including risk assessments and targeted supplier audits. We report annually on our progress related to sustainability topics in our Corporate Responsibility Report, available on www.mt.com/sustainability. Blue Ocean Program Blue Ocean refers to our…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Illumina FY2025 results, 8-K · Illumina 2026 guidance commentary · Illumina Q1 FY2026 results, 8-K · Illumina 2025 corporate activity · Illumina 2026 commentary