In a sliding market, Illumina has defied the odds, trading up to $126.99 per share. Its 31.7% gain since October 2025 has outpaced the S&P 500’s 1.8% drop. This was partly due to its solid quarterly results, and the run-up might have investors contemplating their next move.
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Why Is Illumina Not Exciting?
We’re glad investors have benefited from the price increase, but we're cautious about Illumina. Here are three reasons we avoid ILMN and a stock we'd rather own.
1. Core Business Falling Behind as Demand Declines
We can better understand Genomics & Sequencing companies by analyzing their organic revenue. This metric gives visibility into Illumina’s core business because it excludes one-time events such as mergers, acquisitions, and divestitures along with foreign currency fluctuations - non-fundamental factors that can manipulate the income statement.
Over the last two years, Illumina’s organic revenue averaged 1.1% year-on-year declines. This performance was underwhelming and implies it may need to improve its products, pricing, or go-to-market strategy. It also suggests Illumina might have to lean into acquisitions to grow, which isn’t ideal because M&A can be expensive and risky (integrations often disrupt focus). 
2. EPS Barely Growing
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Illumina’s EPS grew at an unimpressive 1.5% compounded annual growth rate over the last five years, lower than its 6% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.
3. Previous Growth Initiatives Haven’t Paid Off Yet
Growth gives us insight into a company’s long-term potential, but how capital-efficient was that growth? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).
Illumina historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 0.3%, lower than the typical cost of capital (how much it costs to raise money) for healthcare companies.
Final Judgment
Illumina’s business quality ultimately falls short of our standards. With its shares beating the market recently, the stock trades at 24.7× forward P/E (or $126.99 per share). Investors with a higher risk tolerance might like the company, but we think the potential downside is too great. We're fairly confident there are better investments elsewhere. Let us point you toward one of our top digital advertising picks.
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