On May 11, we issued an updated research report on CA-based life sciences company Illumina Inc. ILMN. The company currently carries a Zacks Rank #4 (Sell).Illumina made a disappointing start to first-quarter 2016 with its top and bottom lines lagging the Zacks Consensus Estimate. Order-related shortfall in the quarter was a major concern.Moreover, Illumina continued to face escalating costs from its operations that has the potential to hamper its growth significantly. Evidently, the company witnessed a double-digit rise in operating expenses on account of higher head count, investments in GRAIL and Helix, as well as development projects like Project Firefly during the first quarter.This rise in higher operating expenses impacted Ilumina’s cash flow reserve in the reported quarter. Although investments are necessary for business expansion, such escalating costs dealt a blow to Illumina’s overall performance which has compelled management to adopt a strategy to slow down investments in 2016.We are also disturbed by the company’s dismal performance in Europe which led to a below par outlook for the company’s operations in the country and a slash in the overall guidance for the remainder of 2016. Competitive headwinds also continue to pose threat to the stock.On a brighter note, Illumina’s strong business expansion across the world buoys optimism. During the reported quarter, Illumina witnessed double-digit growth in the Americas and continues to expect mid-teens growth in this region during 2016. On the other hand, although Illumina’s business in Asia-Pacific failed to meet expectations, management was upbeat about the improved customer purchasing patterns noticed in Japan.Moreover, orders worth over $700 million in the quarter beat the company’s expectations. In addition, Illumina added four new customers, reaching the total number to 31. The company’s strong cash balance position also bolsters our confidence in the stock.Key Picks in the SectorBetter-ranked medical stocks are Baxter International Inc. BAX, SurModics, Inc. SRDX and LeMaitre Vascular, Inc. LMAT. While Baxter and SurModics sport a Zacks Rank #1 (Strong Buy), LeMaitre Vascular carries a Zacks Rank #2 (Buy).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 >>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 BAXTER INTL (BAX): Free Stock Analysis Report SURMODICS (SRDX): Free Stock Analysis Report LEMAITRE VASCLR (LMAT): Free Stock Analysis Report ILLUMINA INC (ILMN): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research