3 Reasons to Sell ILMN and 1 Stock to Buy Instead

Illumina has been on fire lately. In the past six months alone, the company’s stock price has rocketed 47%, reaching $121.93 per share. This was partly due to its solid quarterly results, and the performance may have investors wondering how to approach the situation.

Is now the time to buy Illumina, or should you be careful about including it in your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free for active Edge members.

Why Is Illumina Not Exciting?

We’re happy investors have made money, but we're swiping left on Illumina for now. Here are three reasons you should be careful with ILMN and a stock we'd rather own.

1. Declining Constant Currency Revenue, Demand Takes a Hit

Investors interested in Genomics & Sequencing companies should track constant currency revenue in addition to reported revenue. This metric excludes currency movements, which are outside of Illumina’s control and are not indicative of underlying demand.

Over the last two years, Illumina’s constant currency revenue averaged 2% year-on-year declines. This performance was underwhelming and implies there may be increasing competition or market saturation. It also suggests Illumina might have to lower prices or invest in product improvements to accelerate growth, factors that can hinder near-term profitability.

2. EPS Trending Down

We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.

Sadly for Illumina, its EPS declined by 2.2% annually over the last five years while its revenue grew by 5.8%. 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? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Illumina’s five-year average ROIC was negative 0.7%, meaning management lost money while trying to expand the business. Investors are likely hoping for a change soon.

Final Judgment

Illumina isn’t a terrible business, but it doesn’t pass our bar. Following the recent surge, the stock trades at 24.7× forward P/E (or $121.93 per share). This valuation tells us a lot of optimism is priced in - we think other companies feature superior fundamentals at the moment. We’d suggest looking at an all-weather company that owns household favorite Taco Bell.

Stocks We Would Buy Instead of Illumina

Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.

The names generating the next wave of massive growth are right here in our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

Stocks that have made our list include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.