Illumina's (ILMN) 2025 guidance cut reflects uncertainties due to faltering research demand, China's ban on the company's sequencers, and tariff-related costs, Morgan Stanley said in a note Monday.
The brokerage said Illumina cut its 2025 China revenue expectations by $125 million at midpoint to a range of $165 million to $185 million, after China's Ministry of Commerce banned imports of the company's sequencing machines. The company also lowered its 2025 adjusted earnings guidance to a range of $4.20 to $4.30, below consensus and Morgan Stanley estimates, due to tariff impact.
Management is in "active dialogue" with Chinese regulators for a potential resolution while implementing a $100 million cost cutting program to mitigate the impact of lower China revenue, according to the note.
Tariffs are expected to have a gross impact of $85 million in 2025, but Illumina is taking pricing actions starting in H2 to offset the impact, Morgan Stanley said. These pricing actions are expected to generate around $40 million in revenue benefit this year while currency tailwinds are expected to add another $25 million to revenue, the brokerage said.
The brokerage cut its price target for Illumina to $100 from $136, and retained its equal-weight rating on the stock.
Shares of the company were up 4.9% in recent trading.
Price: 79.49, Change: +3.73, Percent Change: +4.92
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