Illumina, Inc. (ILMN) Intrinsic Value & DCF Valuation
Medical - Diagnostics & Research · NASDAQ
Current Price
$219.40
Intrinsic Value
$192.25
-14.1% margin of safety
What Is Illumina, Inc.'s Intrinsic Value?
As of 2026-08-21, the base-case DCF model estimates the intrinsic value of Illumina, Inc. (ILMN) at $192.25 per share, compared with a market price of $219.4, a margin of safety of -14.1%. The base case assumes 7.2% annual free cash flow growth and a 10.0% discount rate.
Across the sensitivity grid the estimate spans $161.13 to $227.64. Intrinsic value is an estimate built on assumptions, not a fact. A higher discount rate or slower growth pushes the estimate down, while stronger cash flow growth lifts it.
How the DCF works · Recalculate with your own assumptions · What is intrinsic value?
Is Illumina, Inc. (ILMN) Undervalued?
At $219.4, ILMN trades about 14.1% above the base-case intrinsic value estimate, a modest premium. By this model the price sits within a normal band, though faster growth than assumed would change the picture.
COMPETITIVE MOAT
↑Proprietary Sequencing Technology
Illumina's advanced sequencing technology offers unparalleled accuracy and throughput. This technological lead creates high switching costs for researchers and diagnostic labs.
↑Extensive Installed Base
A vast installed base of sequencers creates a sticky ecosystem. Customers are incentivized to stay within the Illumina platform due to reagent compatibility and workflow integration.
↑Data and Scale Advantage
Illumina benefits from the massive datasets generated by its instruments. This scale allows for continuous improvement of its sequencing chemistry and algorithms.
INVESTMENT RISKS
↓Dependence on Reagent Sales
A significant portion of Illumina's revenue comes from recurring reagent sales. Any disruption to this model, such as customers developing in-house solutions, poses a risk.
↓Market Adoption of New Platforms
The success of next-generation sequencing platforms relies on widespread adoption. Slower-than-expected market uptake or shifts in research priorities could hinder growth.
↓Competition in Diagnostic Applications
While strong in research, competition is intensifying in the clinical diagnostics space. New entrants with specialized solutions could challenge Illumina's market share.
Base case
ILMN base case valuation
Intrinsic Value
$192.25
Margin of safety
-14.1%
Expected annual return
-2.6%
Base case assumptions: 7.2% annual growth, 10.0% discount rate, 30x exit multiple, 5 year projection. Data as of 2026-08-21.
This base case uses default assumptions and is not financial advice. The intrinsic value changes significantly when the growth rate or discount rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the ILMN valuation
Adjust the growth rate, discount rate, and exit multiple to see how the intrinsic value and margin of safety for Illumina, Inc. respond.
Open DCF Calculator for ILMNCompany Overview
Illumina, Inc. specializes in delivering advanced genetic and genomic analysis tools, primarily through sequencing and array technologies. The company's offerings empower clients across various sectors to integrate genomic insights into both research and clinical environments, with applications spanning critical fields like life sciences, cancer diagnostics, reproductive health, agriculture, and innovative new domains. Illumina's portfolio encompasses specialized instrumentation and necessary consumables for genetic analysis, alongside comprehensive genotyping and sequencing services. They also offer instrument maintenance agreements, collaborate through development and licensing deals, and perform cancer detection tests. Its diverse clientele comprises leading genomic research facilities, universities, state-funded laboratories, medical centers, pharmaceutical and biotechnology firms, commercial molecular diagnostic providers, and businesses focused on consumer genomics. Illumina employs a two-pronged distribution strategy, selling directly to clients across North America, Europe, Latin America, and the Asia-Pacific. Additionally, it partners with life-science distributors to reach markets in Europe, the Asia-Pacific, Latin America, the Middle East, and Africa. Established in 1998, the company maintains its corporate headquarters in San Diego, California.
Financial Metrics — ILMN Stock Valuation Data
Revenue/Share (TTM)
$29.75
FCF/Share (TTM)
$6.22
ROIC (TTM)
13.5%
ROE (TTM)
31.1%
P/FCF
35.4x
EV/EBITDA
25.4x
FCF Yield
2.83%
Debt/Equity
0.89x
Based on trailing twelve-month data, ILMN shows a free cash flow per share of $6.22 and a ROIC of 13.5%, key inputs for stock valuation using the DCF method. The P/FCF ratio of 35.4x and FCF yield of 2.83% are important context metrics when evaluating ILMN's stock valuation relative to peers.
Frequently Asked Questions
What is the intrinsic value of ILMN?
Illumina, Inc. currently generates $6.22 in free cash flow per share. At the current price of $219.40, a DCF model would discount these cash flows at an appropriate WACC and apply a terminal growth rate to arrive at an intrinsic value. The result depends heavily on your growth and discount rate assumptions — a 1% change in WACC typically shifts the fair value estimate by 10-15%. In MiniValuator the model uses a single discount rate that you can edit directly, 10% by default, rather than a computed WACC.
Is ILMN undervalued?
ILMN trades at a P/FCF ratio of 35.4x with a free cash flow yield of 2.83%. This P/FCF is in a moderate range. However, whether ILMN is truly undervalued requires comparing the DCF intrinsic value to the current market price and evaluating whether the margin of safety is sufficient for your risk tolerance.
How do I value ILMN stock using DCF?
To perform a DCF valuation on Illumina, Inc.: (1) Start with the trailing free cash flow per share ($6.22) as the base, (2) project future FCF growth over 5-10 years based on Medical - Diagnostics & Research industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting ILMN's risk profile — with a debt-to-equity of 0.89x, capital structure is an important factor, and (4) add a terminal value for cash flows beyond the projection period.
What is DCF valuation and how does it apply to ILMN?
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For Illumina, Inc., this means projecting how much free cash flow the company will produce over the next 5-10 years, shaped by Medical - Diagnostics & Research trends, then discounting those amounts to today's dollars. ILMN's ROIC of 13.5% shows moderate capital returns.
How does WACC affect ILMN stock valuation?
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For ILMN, with a debt-to-equity ratio of 0.89x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 25.4x, the market's implied discount rate can be reverse-engineered for comparison. In MiniValuator you set this discount rate yourself as a single editable number, 10% by default, instead of computing a formal WACC.
Learn More
- See ILMN PE Valuation → — Earnings-based stock valuation using PE ratio analysis
- DCF Methodology — Step-by-step guide to discounted cash flow analysis
- PE Methodology — Guide to PE ratio stock valuation
- WACC — Understanding the discount rate used in DCF
- Margin of Safety — How to evaluate downside protection
- Intrinsic Value — How to evaluate stock fair value
- How to Calculate Intrinsic Value — Complete guide for investors
Related Valuations
All Healthcare valuationsDCF and P/E value ILMN with different methods and assumptions, so the two conclusions can differ. Compare the P/E fair value.
Price as of 2026-08-21. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.