Why Illumina Stock Is Sinking Today

Shares of Illumina (NASDAQ: ILMN) were falling on Friday. The company's stock was down by as much as 11.4% early in the session, and was still off by 8.7% as of 2:38 p.m. ET. At that time, the S&P 500 had slid by 0.9% and the Nasdaq Composite was down 1.4%.

Illumina, a biotech company that develops and manufactures genetic testing systems, reported disappointing fourth-quarter numbers after the closing bell Thursday.

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The numbers

Illumina's revenue has stagnated or declined for several years now, and its total sales for 2024 were $4.3 billion, down from 2023's $4.5 billion. However, its bottom line was positive for the second quarter in a row in Q4, and its earnings of $0.95 per share beat expectations of $0.91 per share.

Despite that beat, management's guidance for 2025 was below Wall Street's estimates, disappointing investors. Illumina's sales guidance was for $4.34 billion at the midpoint. The analysts' consensus had been for $4.39 billion.

Possible sanctions

The Q4 report came on the heels of China announcing that it had placed Illumina on its "unreliable entity" list, a move that can precede its imposing sanctions on a company. Two of Illumina's Chinese competitors are included in a U.S. bill targeting Chinese companies for reasons of national security.

The Chinese market accounts for 7% of Illumina's business. Losing access to it could materially impact the company's already struggling bottom line. Even if the company is not specifically targeted with sanctions, its business could still be impacted by rising trade tensions between the U.S. and China if they are not de-escalated. Regardless of the eventual outcome of this situation, the uncertainty it introduced this week left the stock ripe for a fall when its earnings report left investors unimpressed.

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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool recommends Illumina. The Motley Fool has a disclosure policy.