Illumina, Inc. [NASDAQ: ILMN] is one of the big losers in pre-market trading. At the time of writing, the stock was down by 16.16% to trade at $304.90. This drop follows lower projections for Q2. In its preliminary revenues for Q2, the company expects revenues of $835 million, or $50 million lower than expected. Illumina attributes this to a number of factors. Key among them are a weakness in the direct-to-consumer market, issues with its population genomics, and weaker sales in its non-high throughput sequencing systems. However, the company has stated that these are temporary issues and do not reflect on its fundamentals. According to the CEO, Francis DeSouza, these challenges are transitory.
The company’s books reflect well on the CEO’s statement. For instance, as per last quarter’s reporting, the company had a strong return on equity, standing at around 21.88%. Profit on margins are also quite high, at about 25.05%. These numbers paint the picture of a strong company, with solid fundamentals backing it up.
However, due to the latest news, the company’s price action could remain bearish in the short-term. From a look at the charts, the stock was already making a rebound in Thursday’s session after hitting a low of $359.03. But, from its pre-market price action, it has broken this support level, and could be headed lower. Illumina is currently trading at $304.90, and if it opens the day at these lows, it could test levels under $300 during Friday’s trading session. Nonetheless, there is also the chance that it could rebound in the day. If news of its lower Q2 projections is already factored in the pre-market price action, then it could range, or make minor gains in the day. That’s because, in spite of weakness in Q2, the company’s fundamentals remain strong. Besides, it could gain from an overall bullish market, fueled by dovish sentiment by the Fed.