Illumina, Inc. ILMN reported adjusted earnings per share (EPS) of 82 cents in the second quarter of 2017, which beat the Zacks Consensus Estimate by 20.6%. The reported figure also surpassed the company’s guided range of 65–70 cents. Adjusted earnings, however, lagged the year-ago number by 4.7%.Including one-time items, the company reported EPS of 87 cents compared with 82 cents a year ago.RevenuesIn the reported quarter, Illumina's revenues grew 10.3% year over year to $662 million, exceeding the company’s expectations of approximately 7%. Moreover, the top line beat the Zacks Consensus Estimate by 3.3%.Per management, top-line growth in the second quarter can be attributed to strong uptake of sequencing consumables and microarrays. Moreover, the NovaSeq platform continued to drive growth with more than 230 orders since the launch in Jan 2017.Product revenues (82.0% of total revenue) increased 6.5% year over year to $543 million. Service and Other (18%) revenues were up 32.2% year over year to $119 million.Illumina, Inc. Price, Consensus and EPS Surprise Illumina, Inc. Price, Consensus and EPS Surprise | Illumina, Inc. QuoteOperational UpdateIllumina's adjusted gross margin came in at 67.1%, reflecting a contraction of 540 basis points (bps) year over year owing to NovaSeq introduction, higher array services revenues and product mix within sequencing consumables. Excluding amortization of acquired intangible assets and including stock-based compensation expenses, adjusted gross margin was 67.0%, highlighting a contraction of 540 bps from the prior-year period.Research and development expenses were up 4% year over year to $130 million and selling, general & administrative expenses rose 14.2% to $169 million. Consequently, the adjusted operating margin of 23.1% reflected a decline of 570 bps from the year-ago period, primarily due to increased investments in GRAIL and Helix.Financial UpdateIllumina exited the second quarter with cash and cash equivalents and short-term investments of $1.89 billion, up from $1.78 billion in the first quarter. Year-to-date net cash provided by operating activities was $346 million, compared with $341 million in the year-ago period.2017 GuidanceBanking on the solid second-quarter performance, Illumina has raised its full-year 2017 revenue growth expectations to 12% from the earlier provided range of 10–12%. Meanwhile, the Zacks Consensus Estimate for full-year 2017 revenues is pegged at $2.65 billion.The company continues to expect adjusted EPS in the band of $3.60–$3.70 (unchanged from earlier guidance). The current Zacks Consensus Estimate for Illumina’s 2017 bottom line stands at $3.63, near the low end of the guided range.Our TakeIllumina exited the second quarter on a solid note, with both earnings and revenues beating the Zacks Consensus Estimate. While the top line was strong on several product launches including the VeriSeq NIPT Solution in Europe and the strength in NovaSeq, the bottom line was impacted by margin pressure.We are currently looking forward to the performance of the Extended RAS Panel that is slated for launch in the third quarter. Notably, the company announced the receipt of FDA approval for this test next-generation sequencing kit in Jun 2017. Also, Illumina’s recently developed venture for the cancer screening market – GRAIL – has started to deliver positive news.On the flip side, weak margins owing to NovaSeq launch, higher array services revenues and product mix within sequencing consumables will continue to act as deterrents. Also, a tough competitive landscape is a concern. We are also apprehensive about issues pertaining to NIH funding.Zacks Rank & Other Key PicksIllumina currently has a Zacks Rank #2 (Buy). Other top-ranked medical stocks are Mesa Laboratories, Inc. MLAB, INSYS Therapeutics, Inc. INSY and Align Technology, Inc. ALGN. Notably, INSYS Therapeutics and Align Technology sport a Zacks Rank #1 (Strong Buy), while Mesa Laboratories carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.INSYS Therapeutics has a long-term expected earnings growth rate of 20%. The stock has gained around 2.5% over the last three months.Align Technology has an expected long-term adjusted earnings growth of almost 26.6%. The stock has added roughly 26.3% over the last three months.Edwards Lifesciences has a long-term expected earnings growth rate of 15.2%. The stock has gained around 4.7% over the last three months.More Stock News: Tech Opportunity Worth $386 Billion in 2017 From driverless cars to artificial intelligence, we've seen an unsurpassed growth of high-tech products in recent months. Yesterday's science-fiction is becoming today's reality. Despite all the innovation, there is a single component no tech company can survive without. Demand for this critical device will reach $387 billion this year alone, and it's likely to grow even faster in the future. Zacks has released a brand-new Special Report to help you take advantage of this exciting investment opportunity. Most importantly, it reveals 4 stocks with massive profit potential. See these stocks now>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Mesa Laboratories, Inc. (MLAB): Free Stock Analysis Report Insys Therapeutics, Inc. (INSY): Free Stock Analysis Report Illumina, Inc. (ILMN): Free Stock Analysis Report Align Technology, Inc. (ALGN): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research