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Illumina, Inc. (ILMN)

POSITIVE
HealthcareDiagnostics & ResearchUnited States

Fundamental

70

Price

$225.66

Market Cap

$33.71B

Part 1 · What the company is worth

Overview

Illumina makes the machines and chemical kits that read DNA: a lab buys a sequencer once, then keeps buying Illumina's proprietary reagents every time it runs a sample. Its instruments are used across research, clinical diagnostics and reproductive health to decode genetic material at a cost that has fallen by orders of magnitude since the company's founding, turning sequencing from a rare research tool into something clinics can order routinely.

How it makes money

The business follows a razor-and-blade model: instruments are a one-time, low-margin sale that puts an Illumina sequencer into a lab, while the consumable reagent kits a lab must keep buying to run each sample carry far higher margins and repeat every time. Because reagents are chemically matched to Illumina's own machines, a lab that has already bought the instrument keeps buying Illumina's consumables for as long as it keeps using it.

Revenue by segment

Consumables74%

The reagent kits a lab must repurchase every time it runs a sample, the recurring core of Illumina's revenue.

Service and other15%

Instrument maintenance, extended support contracts and other smaller revenue streams that accompany the installed base of sequencers.

Instruments11%

The one-time, lower-margin sale of sequencing machines that puts a new lab into Illumina's growing installed base.

Competitive moat

Switching costs · Narrow

A lab that has installed an Illumina sequencer, validated its clinical or research protocols around it and trained staff on its software keeps buying Illumina's proprietary reagents rather than re-qualifying an entire workflow on a rival machine. That lock-in is weakening: newer entrants such as MGI, Element Biosciences and Ultima Genomics now offer sequencing at competitive cost, giving labs a real alternative when they next replace equipment.

What drives demand

Moderately cyclical

Consumables revenue is fairly steady, since labs keep running existing sequencers regardless of the economic cycle, but instrument sales depend on research budgets, venture funding for biotech and hospital capital spending, all of which slow in a downturn. Demand also depends on regulatory and government funding decisions in specific countries, which can swing sharply and are outside Illumina's control.

Key risks

  • Competitive erosion of its installed base — Newer sequencing technologies from competitors such as MGI, Element Biosciences and Ultima Genomics now offer lower-cost alternatives, and a lab that switches instrument no longer needs Illumina's consumables.
  • Dependence on research funding and biotech capital — A meaningful share of demand comes from academic, government and biotech research budgets; cuts to public science funding or a slowdown in biotech venture funding reduce instrument and consumable purchases.
  • Government and geographic policy risk — Trade restrictions, tariffs and country-specific regulatory or reimbursement decisions have already affected sales in some markets, including China, and can change with little warning.
  • Pricing pressure on consumables — As competing sequencing platforms mature, Illumina has had to defend its consumables pricing, and a sustained price war would erode the margin the razor-and-blade model depends on.

The case for

Buyers argue that Illumina's enormous installed base of sequencers locks in years of high-margin consumables revenue almost regardless of which machine a lab buys next, and that falling sequencing costs keep expanding genetic testing into new clinical uses that did not exist a decade ago.

The case against

Sellers fear that lower-cost sequencing challengers are gaining real traction, that a lab switching instruments takes its recurring consumables revenue with it, and that research funding cuts or trade restrictions in key markets can hit demand for reasons that have nothing to do with Illumina's own execution.

Segment figures from fiscal year 2025Sources: Illumina, Inc. — Form 10-K, fiscal year 2025

Written by the editors, published on August 18, 2026

Direct competitors

Who this company fights with for the same customers

No editorial profile for this company yet

No competitor list for this company yet.

Balance Sheet & Liquidity

Revenue

$4.34B

Fiscal year ended 12/28/2025

Net Income

$850M

Fiscal year ended 12/28/2025

Free Cash Flow

$931M

Total Equity

$2.72B

Total Liabilities

$3.92B

Current Ratio

1.80

Interest Coverage

7.99

Debt/EBITDA

2.35

Earnings Per Share

Revenue & Net Income

Free Cash Flow

Income Breakdown

Historical statement

Margins over time

Debt over time

How heavy the debt is

Growth grid

Growth — Revenue

Fair Value Estimation

Overvalued

Fair Value

$141.94

Current Price

$225.66

Margin of Safety

-59.0%

Fair Value Range

$92.26 - $191.61

Estimation Methods

Analyst Target:$198.89
DCF:$68.99
PE-based:$194.92
Graham Growth:$79.75
EPV:$36.18
Analyst Consensus:Buy (17B / 8H / 3S)
Last Earnings Surprise:+4.74%

Valuation Metrics

P/E Ratio

40.96

ROE

31.2%

P/B Ratio

11.88

P/FCF

36.20

Gross Margin

66.1%

ROIC

12.6%

Profitability Radar

Value Creation (Economic Moat)

ROIC

12.6%

WACC

11.8%

ROIC − WACC

+0.8 pp

ROIC is roughly in line with the cost of capital — the company is barely covering its capital cost.

Fundamental Analysis Criteria

Passed (20)

  • EPS shows upward trend
  • EPS CAGR 18.60%
  • Price CAGR 5.83%
  • ROIC 12.6%
  • Gross Margin 66.1%
  • Debt/Equity ratio
  • Operating Margin 18.6%
  • Positive Free Cash Flow
  • CapEx intensity
  • Current Ratio
  • Interest Coverage
  • Debt/EBITDA
  • Return on Tangible Assets
  • ROE 31.1%
  • Revenue Growth 5Y 6.0%
  • Analyst Consensus 61% Buy
  • Earnings Surprise avg 7.8%
  • Earnings Quality (OCF/NI) 1.33
  • Share Dilution -1.9%
  • Piotroski F-Score 8/9

Failed (6)

  • P/FCF 36.20
  • P/B Ratio 11.88
  • Low reliance on intangibles
  • Price below Graham Number
  • DCF valuation (Overvalued)
  • PEG Ratio 8.23

Unavailable (2)

  • Dividend Payout NaN%
  • Net Margin Trend (invalid data)

Piotroski F-Score

8/9

Strong financial health

score
criteria

Earnings Quality

1.33

High quality: earnings backed by cash

Share Dilution

-1.9%

Buying back shares. Shareholder friendly

Governance

Executive Team

NameTitleAge
Mr. Jacob Thaysen Ph.D.CEO & Director50
Mr. Ankur Dhingra CPAChief Financial Officer49
Mr. Kevin Carl PegelsChief of Global Operations57
Dr. Steven Barnard Ph.D.Chief Technology Officer64
Stephanie CamposPresident-
Mr. Scott EricksenVP & Chief Accounting Officer52
Mr. Mark FieldChief Information Officer54
Mr. Conor Noel McNamara C.F.A.VP of Investor Relations-
Ms. Julie Ann Coletti J.D.Chief Legal Officer57
Mr. Jakob WedelChief Strategy & Corporate Development Officer53

Audit Risk

2

Board Risk

1

Compensation Risk

6

Shareholder Rights Risk

2

Part 2 · The price and when to enter

This part won't tell you whether the company is worth owning: it helps you choose when to buy it, once the fundamentals have convinced you. Inside: technical analysis, potential, historical drawdowns, gamma exposure.

Latest News

Recent headlines for ILMN, sourced from Markets Gazette.

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