Why Illumina Stock Got Mashed on Monday

On Monday, for the second time in as many business days, Illumina (NASDAQ: ILMN) stock took it on the chin because of an analyst recommendation downgrade. The biotech's shares closed the day almost 6% lower, during a session when the S&P 500 (SNPINDEX: ^GSPC) landed in the black with a 0.7% increase.

The move is to sell now, says bank

That morning, Barclays changed its recommendation on Illumina stock to underweight (read: sell) from the previous equal weight (hold). It also pulled the lever on a significant price target decrease, lowering its fair value assessment to $100 per share. Formerly, the bank had tagged the biotech as being worth $130.

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According to reports, Barclays' analysts were concerned that the current U.S./China trade dispute would negatively affect the company's operations. Early last week, the Chinese government put it on its "unreliable entity" list of mistrusted foreign companies. The two countries haven't fully settled their differences, so the situation might linger, to Illumina's likely disadvantage.

Compounding that, last Thursday, Illumina published its fourth-quarter and full-year results. These revealed continued erosion in annual revenue, while top-line guidance for the entirety of 2025 fell short of the consensus analyst estimate.

An overreaction to discouraging news

Illumina will continue to be under something of a cloud while it's on the China blacklist. Other than that, investors were overreacting somewhat to the fourth-quarter and 2024 figures -- the company flipped impressively into the black on the bottom line (compared to the same quarter last year), and it has a solid business in the growing field of genetic sequencing.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Barclays Plc and Illumina. The Motley Fool has a disclosure policy.