Illumina Sinks 13% on Light Q3 Revenue Despite EPS Beat and Raised Guidance

Key Takeaways

• Illumina shares fell 13% after third-quarter revenue of $1.13 billion missed consensus, even though adjusted EPS beat and full-year guidance went up.

• Its organic growth outlook stayed at just over 4%, too slow for a stock at 49x forward earnings going into the report.

• Thermo Fisher grew organic revenue 6% in its third quarter and raised its outlook, so the slowdown looks like Illumina's own.

• Natera and Guardant Health report next week and will show whether the clinical demand Illumina credited is holding up.

Illumina ( ILMN:NASDAQ )beat on earnings and raised its full-year guidance after Thursday's close. The stock is down 13% this morning anyway.

That's a growth problem, and the companies around Illumina help show whose problem it is. Thermo Fisher Scientific ( TMO:NYSE )sells into the same labs. Natera ( NTRA:NASDAQ )and Guardant Health ( GH:NASDAQ )run clinical tests on Illumina's sequencers. More on those in a moment.

What exactly happened

The quarter beat on profit and came up short on the top line:

• Revenue of $1.13 billion, up 4.2% and about $20 million below consensus

• Adjusted EPS of $1.44, against a $1.36 consensus

• Full-year revenue guidance of $4.64-$4.66 billion, up from $4.60-$4.64 billion

CEO Jacob Thaysen credited "healthy clinical demand and robust NovaSeq X placements."

There's some fine print. Illumina took $37 million off revenue for tariff refunds it plans to pass on to customers. Without that cut, revenue was $1.17 billion, ahead of consensus. The $1.44 leaves the refunds out, so the earnings beat holds up.

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The price needs growth

The organic growth outlook didn't change: it's still just over 4% for the year. Illumina's revenue shrank from fiscal 2023 to fiscal 2025, and analysts expect growth of 6% to 7% a year in 2027 and 2028:

The stock was priced for that pickup. Going into the report, it traded at 49x forward earnings. That's below its five-year average of 68x but more than triple its April 2025 low:

This one's on Illumina

Thermo Fisher grew organic revenue 6% in its third quarter and raised its 2026 revenue guidance to $47.7-$48.2 billion. If lab demand were cracking, it would show up there too.

Illumina's clinical customers also looked healthy last quarter. Natera processed 22% more tests in its second quarter than a year earlier, and Guardant's oncology test volume rose 63%. If their volumes hold up next week, that backs up Thaysen. It also raises the question of why so little of that growth shows up in Illumina's 4.8% organic growth.