On Jun 30, 2015, we issued an updated research report on California-based molecular diagnostics company Cepheid CPHD, which develops, manufactures and markets fully integrated systems for clinical and non-clinical market tests.
Cepheid reported an impressive first quarter of 2015 with 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 that had been witnessing a downtrend over the past few quarters.
At the moment, the company’s solid performance in the international space buoys optimism. 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.
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 country.
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. Competitive landscape for key products also 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.
Cepheid currently carries a Zacks Rank #3 (Hold).
Key Picks from the Sector
Med/Dental-supply stocks such as Hologic Inc. HOLX, LDR Holding Corporation LDRH and Globus Medical, Inc. GMED are worth a look. All the three stocks hold a Zacks Rank #2 (Buy).
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