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Investing.com -- Shares of Illumina (NASDAQ:ILMN) fell more than 4% in premarket trading on Tuesday after China imposed an immediate ban on the import of its gene sequencing instruments, escalating tensions in the ongoing US-China trade conflict.
Bank of America analysts noted that the ban follows China’s earlier decision to place Illumina on its "unreliable entity" list in February.
“China bans imports of ILMN gene sequencers, following up on earlier blacklist move (in response to US tariffs),” the analysts wrote.
The ban is said to be part of China’s broader response to the recently enacted 10% US tariff on Chinese goods.
While it remains unclear whether the restrictions apply only to sequencing instruments or also include consumables, BofA sees significant downside risk for Illumina’s earnings.
“Scenario analysis is $0.70 to $1.00 of EPS risk from China ban – with other areas of risk looming (ie, Roche),” the analysts stated, estimating an adjusted EPS impact of approximately $3.55 to $3.90 in FY25.
The bank noted that China accounts for around 7% of Illumina’s total revenue, making the ban a material setback for the company.
Illumina has previously indicated plans to work around regulatory hurdles in China, but BofA analysts remain skeptical about its ability to mitigate the impact.
“It’s unclear how quickly ILMN would be able to respond and mitigate some of these headwinds,” they noted.
Given these challenges, the firm maintains its Underperform rating on the stock, with a price target of $90 a share.
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