San Diego, Calif.-based Illumina, Inc. (ILMN) provides sequencing and array-based solutions for genetic and genomic analysis. Its products and services serve customers in a range of markets, enabling genomic solutions in research and clinical settings. In comparison, CRISPR Therapeutics AG (CRSP) is a Basel, Switzerland-based gene-editing company that focuses on developing transformative gene-based medicines for serious human diseases.
Significant developments in the genomics industry have helped researchers quickly identify SARS-CoV-2. Further technological advances, such as the integration of genome-based tests and extensive research and development (R&D), are expected to drive the genomics industry’s growth. According to a The Expresswire report, the genomics market is expected to grow at a 10,8% CAGR of 10.8% over the next five years. Consequently, both CRSP and ILMN should benefit.
ILMN has gained 47.6% over the past year, while CRSP returned 31.5%. Also, ILMN’s 37.8% gains over the past three months are significantly higher than CRSP’s 10.4% returns. And in terms of their past nine months’ performance, ILMN is the clear winner with 75.5% gains versus CRSP’s 11%.
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But which of these two stocks is a better buy now? Let’s find out.
On July 22, ILMN affirmed its commitment to re-acquire GRAIL, a healthcare company focused on multi-cancer early detection. Francis deSouza, the company’s CEO, said, “Re-uniting GRAIL with Illumina will accelerate the availability of the GRAIL test by many years in the EEA and globally, saving tens of thousands of lives and leading to significant health care cost savings."
On June 15, CRSP announced a strategic partnership with Capsida Biotherapeutics Inc. to research, develop, manufacture, and commercialize in vivo gene editing therapies delivered with engineered AAV vectors. This collaboration will leverage the expertise and capabilities of both companies in developing life-changing treatments for severe neurological diseases.
Recent Financial Results
ILMN’s revenue increased 78% year-over-year to $1.13 billion for its fiscal second quarter, ended July 4, 2021. The company’s total assets grew 14.4% year-over-year to $8.67 billion. Its non-GAAP net income increased 200% year-over-year to $276 million. Also, its non-GAAP EPS came in at $1.87, up 201.6% year-over-year.
CSPR’s total collaboration revenue was $900.20 million for the second quarter, ended June 30, 2021, versus $0.10 million in the year-ago period. The company’s cash, cash equivalents, and marketable securities grew 43.4% sequentially to $2.59 billion. Its net income was $759.20 million compared to a $79.70 million net loss in the prior-year period.
Past and Expected Financial Performance
ILMN’s revenue and total assets grew at CAGRs of 8.5% and 14%, respectively, over the past three years. The company’s revenue is expected to increase 46.2% for the quarter ending September 30, 2021, and 10.6% in its fiscal year 2022. Its EPS is expected to grow 33.3% for the quarter ending September 30, 2021, and 16.4% in fiscal 2022. Moreover, its EPS is expected to grow at a 24% rate per annum over the next five years.
In comparison, CRSP’s revenue and total assets grew at CAGRs of 189.5% and 101.7%, respectively, over the past three years. Analysts expect CRSP’s revenue to increase 677% for the quarter, ended September 30, 2021, but decrease 95% in its fiscal year 2022. The company’s EPS is expected to decline 30.3% for the quarter, ending September 30, 2021, and 280.2% in fiscal 2022. Also, CRSP’s EPS is expected to decrease at a 200.4% rate per annum over the next five years.
ILMN’s $3.97 billion trailing-12-month revenue is significantly higher than CRSP’s $901.76 million. However, CRSP is more profitable, with EBITDA and net income margins of 50.92% and 49.52%, respectively, compared to ILMN’s 21.26% and 19.39%.
Furthermore, CRSP’s 25.41%, 14.19%, and 14.91% respective ROE, ROA, and ROTC f compare favorably with ILMN’s 15.79%, 5.09%, and 5.77%.
In terms of forward non-GAAP P/E ratio, ILMN is currently trading at 82.31x, which is 217.7% higher than CRSP’s 25.91x. Furthermore, ILMN’s 55.44x forward EV/EBITDA is 204.8% higher than CRSP’s 18.19x.
Though ILMN looks more expensive compared to CRSP, we think it’s worth paying this premium considering ILMN’s significantly higher earnings growth potential.
ILMN has an overall B rating, which equates to Buy in our proprietary POWR Ratings system. In contrast, CRSP has an overall C rating, which translates to Neutral. The POWR Ratings are calculated considering 118 distinct factors, with each factor weighted to an optimal degree.
Both ILMN and CRSP have B grades for Sentiment, in sync with favorable analyst sentiment.
ILMN has an A grade for Quality. This is justified given ILMN's 69.31% trailing-12-month gross profit margin, which is 25.1% higher than the 55.40% industry average. CRSP, on the other hand, has a Quality grade of C, which is in sync with its 60.94% trailing-12-month gross profit margin, which is slightly higher than the 55.40% industry average.
Of the 506 stocks in the Biotech industry, ILMN is ranked #14, while CRSP is ranked #46.
Beyond what we’ve stated above, we have also rated both the stocks for Stability, Momentum, Value, and Growth. Click here to view all the ILMN ratings. Also, get all the CRSP ratings here.
Genomics-related stocks ILMN and CRSP are expected to benefit over the long run owing to the increasing need for genome-based solutions to fight against rising chronic diseases. However, we think ILMN is the better buy now because of its better financials and superior growth prospects.
Our research shows that odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the top-rated stocks in the Biotech industry here.
Click here to checkout our Healthcare Sector Report for 2021
ILMN shares were trading at $517.16 per share on Wednesday afternoon, down $5.73 (-1.10%). Year-to-date, ILMN has gained 39.77%, versus a 19.30% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.Illumina vs. CRISPR: Which Genomics Stock is a Better Choice? appeared first on StockNews.com