PACB - Illumina: Cheap With Further Upside From Grail

• Illumina's acquisition of Grail was received poorly - we disagree wholeheartedly with the market and see significant upside from the acquisition, which increases its addressable market by 10x.
• The company is dominant, with a ~70% market share, and is the global market leader in next-generation sequencing and microarray-based solutions, giving it a strong competitive position to execute from.
• The drop in price following the Grail acquisition announcement provides long-term investors with an attractive entry point.
• Our valuation suggests Illumina trades at a 49% discount to fair value excluding Grail, which, if successful, represents over 500% upside for shareholders.

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