On Apr 27, 2015, we issued an updated research report on CA-based molecular diagnostics company Cepheid CPHD, which develops, manufactures and markets fully integrated systems for clinical and non-clinical market tests.
We are impressed to note that Cepheid carries a Zacks Growth Style Score of ‘B,’ which coupled with its Zacks Rank #2 (Buy) reflects better investment opportunities for the stock in the growth investing space.
Cepheid reported an impressive first quarter of 2015 with both earnings and revenues ahead of the respective Zacks Consensus Estimate.
Interestingly, Cepheid’s Non-Clinical business returned to positive top-line growth during the quarter, driven by better-than-expected bio-threat and research grant revenues, which had been witnessing deteriorating sales over the past few quarters.
Presently, we are encouraged by the company’s strong performance in the international space. In the reported quarter, Cepheid witnessed strong growth in its International Commercial Clinical business which surged 35% year over year. The company has also managed to establish a strong footprint in the emerging markets region.
In addition, Cepheid has a robust pipeline of products that stands in good stead for the company. During the first quarter, Cepheid added 3 new tests to its menu, namely Xpert Ebola in the U.S. (for emergency use authorization only), and the Xpert HCV Viral Load and Xpert HIV-1 Qual tests outside the U.S.
On the flip side, we are wary of the foreign currency fluctuation that management anticipates will affect Cepheid’s overseas business in the near term, while competitive landscape for key products continues to be a major overhang.
Currently, the Zacks Consensus Estimate for 2015 and 2016 stands at a loss of 45 cents and 10 cents per share, respectively.
Key Picks from the Sector
Med/Dental-supply stocks such as Inogen, Inc. INGN, AmerisourceBergen Corp. ABC and Electromed, Inc. ELMD are worth a look. While Inogen holds a Zacks Rank #1 (Strong Buy), AmerisourceBergen and Electromed sport a Zacks Rank #2 (Buy).
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