Gene sequencers spiral higher
06/13/18

It’s a brave new world.

While gene-editing technology has gotten a lot of ink lately—as much because of the fear of tinkering with human evolution as for the promise of curing genetic ailments—many of the companies in this space are more about the possibility of delivering gene-based therapies at some point in the future than making money right now. And their stock prices can exhibit the volatility that often occurs when dreams of potentially game-changing science collide with inevitable setbacks and disappointments.

But there’s another strand of the genetics business that’s much more about the here-and-now—gene sequencing and genetic diagnostics, which are all about deciphering genetic information and testing for various genetic conditions. That business is booming today, and some of the stocks in this industry have been going gangbusters in recent months. Technology that science and medical labs all want to have but could never afford in the past is becoming more attainable.

To get an idea of how far this industry has come in a short amount of time, consider that it took 13 years and around a billion dollars to first decode the human genome back in 2003.1 In 2007, that cost had dropped to a bargain-basement $10 million. By last year, gene-sequencing giant Illumina (ILMN) could do it in about an hour for a thousand bucks, and announced their goal of getting the cost down to $1002—less than half of what a share of Illumina stock is going for these days.

Illumina (ILMN), 12/20/17 – 6/12/18. Illumina (ILM) daily price chart. New all-time highs.

Source: OptionsHouse

Although the $100 genome is still a few years away, the San Diego-based firm is the undisputed king of gene sequencing, sporting a $42.5 billion market cap and controlling 75% of the sequencing market.3 The daily chart above shows yesterday, when the broad market moved very little, ILMN extended its red-hot month-long upswing by rallying 2% and hitting the latest in a series of record highs. The stock is up more than 32% on the year—more than 20% since May 2.
Bio-Rad (BIO), Thermo Fisher (TMO), and Danaher (DHR) 7/20/17 – 6/12/18.

Source: OptionsHouse

For bulls looking for more upside, the real issue with ILMN and other companies involved in gene sequencing and diagnostics, such as Thermo Fisher Scientific (TMO), Bio-Rad Labs (BIO), and Danaher (DHR), may be the recent absence of pullbacks (especially in ILMN and BIO) that could offer more of a short-term edge. The chart above shows TMO, BIO, and DHR have all gained 20% or more since late-July 2017.
Illumina (ILMN), 11/14/16 – 6/12/18. Illumiona (ILMN) weekly price chart. Pullbacks to previous highs

Source: OptionsHouse

A weekly chart of ILMN (above) shows the stock has tended to pull back (at least) to the level of a previous intermediate-term swing high before embarking on another up move.

Something for traders to keep in mind during high-flying times.

Market Mover Update: Casey’s General Stores (CASY) missed earnings and revenue estimates yesterday, sending the stock down more than 6% intraday and below the bottom of the trading range noted in “Tell-tale earnings.” The stock did, however, rebound to close in the upper portion of its range. Stay tuned.

 

Click here to log on to your account or learn more about E*TRADE's trading platforms, or follow the Company on Twitter, @ETRADE, for useful trading and investing insights.


1 LiveScience.com. Human Genome Project Marks 10th Anniversary. 4/14/13.

2 San Diego Tribune. New machines can sequence human genome in one hour, Illumina announces. 1/9/17.

3 LabioTech. How Low Can the Price of a Next Generation DNA Sequencer Go? 4/17/18.