Recently, we issued an updated research report on
). The company reported a better-than-expected fourth-quarter
2013. Moreover, its strong outlook for 2014 makes us confident
about Cepheid's business model that promises to retain the
positive momentum over the long haul.
Barring the second quarter of 2013, Cepheid has delivered
positive surprises in each of the last four quarters, with an
average beat of 36.29%. However, the company's loss per share in
the last reported quarter, although narrower than the Zacks
Consensus Estimate, was down a huge 1,035% on a year-over-year
Despite this, the company posted a decent outlook for 2014. It
expects total revenue in the range of $446-$461 million. The
Zacks Consensus Estimate falls at the lower end of the guidance
range. Further, Cepheid anticipates adjusted net income in the
range of 24 cents-29 cents per share. The current Zacks Consensus
Estimate of 7 cents per share remains far below the expected
Cepheid serves a fast-growing molecular diagnostic market with
strong demand for its tests. We believe that the ongoing efforts
for capacity expansion should enable the company to meet the
market demand for its offerings. The company expects to launch a
gamut of tests in the U.S. as well as the overseas market by the
end of 2017. In our opinion, test menu expansion is a significant
growth catalyst for this molecular diagnostic company.
The company's quarterly top-line performance generates
optimism with revenues edging past the Zacks Consensus Estimate.
Revenues surged a significant 23% year over year on the back of
strong market adoption of GeneXpert Systems and broadening reach
of the Xpert test portfolio. Growth was also driven by strong
business in HBDC and improved performance in the commercial
Margin pressure however still remains as an area of concern on
account of unfavorable mix toward the lower-margin HBDC business.
Also, a difficult capital spending environment continues to pose
challenges for Cepheid. This is reflected in the poor fiscal
guidance provided by the company. The stock currently carries a
Zacks Rank #5 (Strong Sell).
Key Picks from the Sector
Nonetheless, medical stocks such as
Natus Medical Inc.
) are expected to do well. While Natus Medical carries a Zacks
Rank #1 (Strong Buy), AngioDynamics and ABIOMED have a Zacks Rank
ABIOMED INC (ABMD): Free Stock Analysis
ANGIODYNAMICS (ANGO): Free Stock Analysis
NATUS MEDICAL (BABY): Free Stock Analysis
CEPHEID INC (CPHD): Free Stock Analysis
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