Illumina falls after 2Q revenue misses estimates

NEW YORK - Shares of Illumina Inc. sank Thursday after the genetic analysis instrument maker said revenue in the second quarter fell short of its own forecast and Wall Street estimates.

Illumina said sales of microarray analysis devices were weaker than expected, but it generally maintained its expectations for the full year, saying it expects federal stimulus funds to boost its results starting in the fourth quarter. Analysts generally remained positive about the company, but its stock fell $4.50, or 12 percent, to $33.64 in morning trading.

Microarray testing determines which genes in a cell are turned on and which are turned off.

Late Wednesday, The San Diego company said its second quarter revenue will be about $161 million, well below its prior forecast and about $11.6 million less than analysts were expecting. It added that customer uncertainty about stimulus funding could hurt its third-quarter revenue as well.

Illumina widened its revenue forecast, saying it now expects between $690 million and $720 million this year, which matched its initial estimate for the year. In April the company raised the low end of its forecast to $700 million.

Deutsche Bank Ross Muken said Illumina reported strong growth in revenue from gene sequencing products, but received less microarray revenue because of an issue with the National Institute of Health's Genome-Wide Association Studies. The agency is conducting studies to identify common genetic factors that affect health and disease, but Muken said the participants are holding off on buying new equipment.

He kept a "Buy" rating on Illumina shares.

Robert W. Baird analyst Quintin Lai said some of the testing devices could become available later this year or early in 2010. He said prices were steady and Illumina maintained its position in the market. Lai maintained an "Outperform" rating.

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