Shares of companies that make instruments used in genetic analysis tumbled Friday after Illumina Inc. withdrew its annual revenue guidance, saying a variety of factors are hurting its business.
After the market closed on Thursday, Illumina withdrew its forecast of $1.12 billion to $1.14 billion in annual revenue. The San Diego company said it expects to report about $235 million in revenue in the third quarter and a greater amount in the fourth quarter. Both were far short of analyst estimates, and in midday trading, shares of Illumina plunged $13.41, or 34 percent, to $26.52. The stock has lost 46 percent of its value in the year to date.
Analysts said several of Illumina's problems were specific to the company, but one of the most important ones was not: demand from clients like government health agencies and academic research institutions remains under serious pressure because of economic weakness and debt problems in the U.S. and Europe.
"These customers are operating in an environment unlike any they have experienced in the past and are being forced to make tough purchasing and staffing decisions," said Citi Investment Research analyst Amit Bhalla. "As such we continue to remain cautious on the (life sciences) tools sector."
Officials at Illumina weren't available for comment Friday.
Bhalla had downgraded shares of Illumina to "Hold" from "Buy" Thursday before the preannouncement and cut his price target to $44 per share from $90. Friday Cowen & Co. analyst Doug Schenkel downgraded Illumina to "Neutral" from "Outperform." And Wednesday Deutsche Bank analyst Ross Muken downgraded shares of competitor PerkinElmer Inc. to "Hold" from "Buy."
PerkinElmer stock declined $1.78, or 9.1 percent, to $17.77, and shares of Waters Corp. lost $5.70, or 7.2 percent, to $73.40. Agilent Technologies Inc. shares fell $2.89, or 8.6 percent, to $30.66 and Thermo Fisher Scientific Inc. stock dropped $3.61, or 6.7 percent, to $50.06. Life Technologies Corp. shares fell $2.54, or 6.4 percent, to $36.84.