Shares of Illumina can surge more than 50% from here on the back of new product launches, according to Piper Sandler. Analyst David Westenberg named biotech company Illumina a top pick and reiterated his overweight rating on the stock, citing new sequencing products that could drive growth at the company. “We hosted Illumina on our bus tour, where management commentary reinforced our view that Illumina will likely launch Chemistry X (and we think an instrument) that will overwhelmingly appeal to academics in the near term,” he said in a note. “Recall, academic researchers are more likely to use lower sequencing data cost to generate more data (ie lower cost means more sequencing spend).” “We name Illumina our new top pick given the potential impact of the Chemistry X launch,” the note read. Illumina is down 46% this year, most recently falling after reporting disappointing second-quarter earnings . Still, the analyst said he approves of the genetics company’s competitive position in the industry in his “non consensus call.” “Illumina still has a dominant competitive position and is in control of its own pricing structure. We think the company can launch a sequencer where it will see rapid adoption among high throughput users in the academic setting. These customers ramp quick, and price compression on a per-gigabase basis should be offset by instrument purchases and more sequencing,” he wrote. Westenberg also said that a spinoff of Grail, a cancer early detection business, could be possible in the future, which “would represent an immediate upside to the stock if it were to happen,” according to the note. The analyst has a $320 price target on Illumina, which implies 55% upside from Friday’s closing price of $205.37. Shares of Illumina dipped 1.6% in Monday premarket trading. —CNBC’s Michael Bloom contributed to this report.
