Illumina’s (NASDAQ:ILMN) strong growth and tremendous potential make ILMN stock worth buying.

It’s true that the company’s shares are not at all cheap. Still, the demand for Illumina’s next-generation sequencing tools are poised to surge tremendously, making the shares very attractive for longer-term growth investors.

Meanwhile, after researching the issue of Illumina’s controversial acquisition of Grail, I think that there’s an 80%-90% chance that the deal will be approved.

A former Illumina subsidiary, Grail has developed a blood test for 50 types of cancers. Whether or not the deal is ultimately approved, Grail and its peers are likely to be a game-changer for Illumina.

In the first quarter, Illumina’s sales soared about 27% year-over-year to a record $1 billion, up from roughly 20% YOY during the previous quarter.

What’s more, Illumina was profitable, reporting EPS of $1. For all of 2021, the biotech firm predicts that its EPS, excluding certain items, will be $5.80-$6.05.

On its website, Illumina states that, “Our technology is helping to drive breakthroughs in genetic disease testing by facilitating identification of disease-causing genetic variants,” adding that, “we’re developing solutions to facilitate early detection and intervention.”

By enabling diseases in children to be diagnosed much more quickly, NGS can save millions of lives. By preventing money from being spent on ineffective treatments based on inaccurate diagnoses and unnecessary testing, it can also save a lot of money.

In the last decade, more of Illumina’s products have been used to develop treatments, rather than just conduct research.

A Closer Look at ILMN Stock

I expect that trend to continue going forward, causing its revenue to jump as more of its products directly save lives and a great deal of money, making its innovations much more valuable.

Multiple companies including Grail have developed cancer blood tests, many of which will likely utilize Illumina’s NGS tools.

In a March 2021 press release announcing that it was challenging Illumina’s acquisition of Grail in court, The Federal Trade Commission stated that, “Illumina is the only provider of DNA sequencing that is a viable option for these multi-cancer early detection…tests in the United States.”

For example, Exact Sciences (NASDAQ:EXAS) has acquired Thrive, which is also developing cancer tests. According to Barron’s, “other companies already market blood tests to guide drug selection for cancer patients, or to monitor for recurrence after treatment.”

Firms in the latter category include Roche Holding (OTC: RHHBY), Guardant Health (NASDAQ:GH), Natera (NASDAQ: NTRA), and Invitae (NYSE: NVTA), Barron’s stated.

The Grail Deal Is Likely to Be Approved

I’ve seen many arguments that convince me Illumina’s takeover of Grail will probably get the nod from U.S. courts in the end.

First, it’s important to note that the FTC is allowing EU regulators to attempt to derail the deal. However, the Progressive Policy Institute (PPI),  a think tank, quoting The Wall Street Journal, notes that the deal is not actually eligible to be scrutinized by the EU.

Instead, PPI says the bloc is engaging in what the think tank calls “the general EU strategy of ‘regulatory imperialism.’”

Because the EU generally has taken a “risk-avoiding approach” to regulation, if the bloc is regularly allowed to regulate the American biotech sector and obstruct its agreements, “commercialization of important technologies” could be decelerated, PPI argued.

To bolster its case, the think tank states that, “business spending on biotech research and development (R&D) in the EU comes to roughly one-third that of the U.S.”

Moreover, Illumina has maintained that its existing infrastructure and future investments in Grail would enable the latter company’s test to reach the market much sooner than if Grail was on its own. The sooner launch will save “millions” of lives, Illumina contended.

As I pointed out in a previous column, Illumina and Grail do not compete with each other, making it very unlikely that a high-level court would agree to block the deal.

Finally, Illumina has agreed to enable the makers of cancer blood tests to have equal opportunity access to its DNA sequencing technology.

All of these points, taken together, would likely trump the FTC’s concerns about Illumina using its hardware to damage Grail’s competitors.

What’s more, I believe that a U.S. appeals court will overturn the lower court ruling that allowed the EU to assess the proposed deal.

 The Bottom Line on ILMN Stock

Trading at a forward price-earnings ratio of 87.7, Illumina does have a high valuation. Still, given the company’s past growth and its tremendous future opportunities, I believe that the shares are still a buy for longer-term growth investors.

And although the shares would be far more attractive if Illumina is allowed to acquire Grail, I believe that Illumina’s financial results should get a large lift from the advent of blood tests for cancer, even if the Grail deal is blocked.

On the date of publication, Larry Ramer held long positions in ILMN and EXAS. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Larry Ramer has conducted research and written articles on U.S. stocks for 13 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015.  Among his highly successful, contrarian picks have been GE, solar stocks, and Snap. You can reach him on StockTwits at @larryramer.