Healthcare company Illumina (NASDAQ:ILMN) is set to face a significant loss from its forced spin-off of Grail (NASDAQ:GRALV), with traders valuing the cancer test developer at a massive 94% discount compared to the $8 billion Illumina paid in 2021. Though the spin-off isn’t final yet, shareholders can already trade rights to Grail shares, which are trading in the $15 range and giving it a market value of less than $500 million.
This move comes after Illumina faced heavy pressure from U.S. and European regulators over the acquisition. The U.S. Federal Trade Commission and the European Commission ordered Illumina to unwind the Grail deal last year. On top of this, Illumina has agreed to fund Grail for two-and-a-half years at a cost of $1 billion to comply with EU rules. As a result, Illumina’s share price dropped nearly 80% since the deal closed.
Interestingly, analyst Doug Schenkel from Wolfe Research slammed the deal as “the worst in the history of diagnostics.” Nevertheless, he believes the spin-off could give Illumina a chance to focus on its main business under new leadership.
Investor Sentiment for ILMN Stock Is Currently Positive
Despite Schenkel’s harsh words, the sentiment among TipRanks investors is currently positive. Out of the 740,487 portfolios tracked by TipRanks, 0.2% hold ILMN stock. In addition, the average portfolio weighting allocated towards ILMN among those who do have a position is 2.84%. This suggests that investors of the company are fairly confident about its future.
Furthermore, in the last 30 days, 2.4% of those holding the stock increased their positions. As a result, the stock’s sentiment is above the sector average, as demonstrated in the following image:
Is ILMN a Good Stock to Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on ILMN stock based on nine Buys, eight Holds, and three Sells assigned in the past three months, as indicated by the graphic below. After a 46% decline in its share price over the past year, the average ILMN price target of $145.24 per share implies 34.05% upside potential.
