Illumina expects to top $1 billion in revenue, Snap gets upgrade

Yahoo Finance’s Julie Hyman, Myles Udland, and Brian Sozzi discuss Illumina’s optimistic preliminary revenue for Q1 fiscal year 2021 and Snap Inc. shares gain following upgrade.

Video Transcript

MYLES UDLAND: All right. Welcome back to Yahoo Finance Live on this Tuesday morning. Let's take a look at some tickers that are on the move today. As we've mentioned, we're not seeing a lot of movement in the major averages. But as we see shares of Illumina are higher, up about 8% following the company's quarterly results out last night.

Julie Hyman, the human genome trade. This is a Cathie Wood trade, picking up some steam here as we head into 2021.

JULIE HYMAN: Yeah, the five year chart of this stock is just a monster. The company's saying the first quarter revenue is going to top a billion dollars. It says it has record orders and revenue growth, in particular in that gene sequencing and also businesses related to it.

So you see the year to date chart. It's up by about 13% thus far this year. For the full year it says, year over year revenue growth is going to be 25% to 28%.

Apparently there had been a little bit of concern about an acquisition the company had done. This seems to be reassuring investors on that front. And as you said, this has been sort of a hot, future-looking stock, on the part of Cathie Wood and others.

That this is one of these companies that eventually-- I don't know. We'll all be getting our genes sequenced, I guess. But for now not necessarily as widespread perhaps as she and others are predicting, but still a billion in revenue is nothing to sneeze at.

MYLES UDLAND: And trading at a modest 60 times, trailing 12 months revenue there for Illumina.

BRIAN SOZZI: Cheap.

MYLES UDLAND: Cheap stock, in this market. But again, look-- in this market you got revenue, I mean you're ahead of a lot of the class, given what we've seen come out in the last several quarters.

All right. Brian Sozzi, another name that's not going to help you sequence your genes, but has also had a beautiful look at the stock chart over the last couple of years. That is Snap stock. It's higher today after getting an upgrade.

I mean $57 a share on Snap-- we're all old enough to remember this as a single digit stock. This was, what is Snap going to do? They have to do a take under. They can't make it. And boy, it's been a nice ride.

BRIAN SOZZI: Yeah, Myles, I reckon that I remember when Snap was created. So "Boomer" me remembers when Snap was created. But look, to your point, Snap shares up for 420% the past year. It really has been a stock, and I would say a company, that has defied expectations. Certainly sales and profits have accelerated throughout the pandemic as a lot of people continue to be at home, glued to their screens.

And also keep in mind, we had that story a couple of weeks ago in "The Wall Street Journal" suggesting Snap is trying to circumvent some coming privacy changes coming out of Apple. Those changes are likely to hurt profits of a company like a Facebook, like an Instagram. Snap working to try to get out in front of that.

But here's a P/E multiple for you, Myles, compliments of Yahoo Finance Plus data. P multiple, four P multiple on Snap-- 625 right now.

MYLES UDLAND: They have a multiple. It doesn't divide by zero. Again, another--

BRIAN SOZZI: I'm looking right at it.

MYLES UDLAND: Something else. Something else that will distinguish you among many other companies that are in the market these days. My thing on Snap has always been-- and there's no real audience for this kind of piece. I'm not going to spend you know, a month writing 25,000 words on the merits of being a public company, and Snap being the poster child for that. I'll just mention it here from time to time.

Snap being public and the market forcing discipline on a very young founder CEO, and the way that Evan Spiegel and his team-- the way that he reworked the team, the way he prioritized things. He did rounds of layoffs. He rightsized the business. He was forced to focus by the quarterly cadence of Wall Street's demands.

And a lot of people, particularly in the tech space, have a lot of negative things to say about what Wall Street expects of public companies. But I think over the long run it instills a discipline in good management teams that create better results than would otherwise be achieved were the company to stay public.

And I think, again, we see that example here you know, in shares of Snap. Maybe it's not a $57 stock forever. But again, this thing seemed like it was in need of a lifeline in the mid single digits, and now they very much have-- as the strategists like to say-- visibility into where the business is headed over the next five or 10 years. And again, I would attribute that to their being public and needing to respond to some of those pressures.