(Reuters) - Shares of Illumina Inc <ILMN.O> rose 16 percent on Tuesday, after the company unveiled new technology, which is expected to eventually reduce the cost of sequencing to $100 per human genome, prompting a slew of price target increases.

It took government-funded scientists $3 billion and 13 years to sequence the first human genome by 2003.

Illumina on Monday unveiled its NovaSeq sequencing platform, which is expected to deliver three-times faster and twenty percent cheaper sequencing over existing models.

In the way that Illumina's HiSeq X enabled the $1,000 genome, future systems derived from NovaSeq architecture could enable the $100 genome, Chief Executive Francis deSouza said.


The human genome is the full complement of DNA, or genetic material, a copy of which is found in nearly every cell of the body.

Gene-sequencing is a method to analyze the genome, and can among other uses, help identify inherited disorders and markers of disease progression.

A complete replacement of instruments used by Illumina's current customers represents a $2 billion opportunity alone, and the company believes the lower price could drive further market expansion, Barclays analysts said.

Whether Illumina, which also disclosed a partnership with IBM's <IBM.N> Watson unit, could return to robust instrument growth weighed on the stock last year.

Adding further capacity - even with a major upgrade - is unlikely to lift demand, especially from customers that are still struggling to meet margin targets and find it hard to fork out $985,000 for NovaSeq, Leerink analysts said.

The company's stock plunged 25 percent on a weak third-quarter forecast in October. Overall, its shares lost a third of their value in 2016.

Last January, the company announced it was forming a new company called Grail to develop a universal blood test to identify early-stage cancers in people with no symptoms of the disease.

Coupled with Grail, as well as the ramp up of several new precision medicine initiatives, Illumina has the pieces in place to return to mid-teens organic revenue growth by 2018, Bank of America Merrill Lynch analysts said.

BofA Merrill upgraded the stock to "buy" from "neutral" and raised the price target to $175 from $145.

As part of the J.P. Morgan healthcare conference, the company forecast fourth-quarter sales of $619 million, about $6.5 million above Thomson Reuters I/B/E/S estimates.

The company's stock rose as much as 18.1 percent to $167.10, its biggest intraday percentage gain in nearly five years.

(Reporting by Natalie Grover in Bengaluru; Editing by Shounak Dasgupta)

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