Illumina (NASDAQ:ILMN), a maker of gene sequencing machines, completed the previously announced spin-off of GRAIL. GRAIL will now operate as an independent company and will start trading on NASDAQ under the symbol GRAL on June 25. Investors reacted positively to this news, with Illumina stock rising over 1.5% on June 24 and continuing the momentum in after-hours trading.
It’s worth noting that Illumina will retain a minority stake of 14.5% in GRAIL.
The divestment will enable ILMN to focus on its core gene sequencing business.
GRAIL Weighed on ILMN Stock
Illumina founded GRAIL and subsequently spun it off in 2016. However, in 2021, Illumina re-acquired GRAIL for $7.1 billion. The company’s strategy was to enter the early cancer detection market by leveraging GRAIL’s Galleri blood test. The Galleri blood test is renowned for identifying 50 different cancers before they show symptoms.
However, the acquisition plan hit a roadblock with European antitrust regulators. The regulators were concerned that Illumina’s control over GRAIL might limit competition in cancer detection technology. In July 2023, the European Commission fined Illumina and GRAIL for proceeding with the merger without approval, violating EU merger rules.
These regulatory issues negatively impacted Illumina stock, which dropped about 43% over the past year.
Is Illumina Stock a Buy?
Wall Street analysts are cautiously optimistic about Illumina stock, which faces macro and competitive headwinds. The company has nine Buys, eight Holds, and three Sell recommendations for a Moderate Buy consensus rating.
Analysts’ average price target on ILMN stock is $144.61, which implies 31.18% upside potential from current levels.
