CPHD

Cepheid Inc

Healthcare


Presented:09/16/2015
Price:$52.78
Cap:$3.79B
Current Price:$52.95
Cap:$3.89B

Presented

Date09/16/2015
Price$52.78
Market Cap$3.79B
Ent Value$4.38B
P/E RatioN/A
Book Value$5.20
Div Yield0%
Shares O/S71.86M
Ave Daily Vol742,841
Short Int11.60%

Current

Price$52.95
Market Cap$3.89B
Cepheid operates as a molecular diagnostics company, which develops, manufactures, and markets fully-integrated systems for testing in the clinical market, as well as for application in the company's legacy industrial, biothreat and partner markets. The company's systems enable molecular testing for organisms and genetic-based diseases by automating otherwise complex manual laboratory procedures. It operates through two principal systems: GeneXpert and SmartCycler. The GeneXpert system, the company's primary offering in the clinical market, integrates sample preparation in addition to DNA amplification and detection. It is designed for a broad range of user types ranging from reference laboratories and hospital central laboratories to satellite testing locations, such as emergency departments and intensive care units within hospitals and doctors' offices. The SmartCycler system integrates DNA amplification and detection to allow rapid analysis of a sample. Cepheid was founded by Thomas L. Gutshall, William McMillan, Kurt Petersen, Greg Kovacs, and Allen M. Northrup on March 4, 1996 and is headquartered in Sunnyvale, CA.

Updated on 9/21/15

Publicly traded companies mentioned herein: BioMerieux (BIM FP), Cepheid (CPHD), Roche Holding AG (ROG VX; RHHBY)

Highlights

The presenter is short shares of Cepheid (CPHD) and sees the low $50s as an attractive entry level. His bet is that the molecular diagnostics company, which has historically been a "darling" in the industry with a great growth story, is facing growing revenue and margin headwinds. Material cracks appear to be emerging in the business operationally and there is patent risk in 2017. In addition, there has been substantial turnover in the ranks at a time when competition is increasing and there is pricing pressure in the industry. He hasn’t seen this combination of operational and accounting issues in a long time, and if the presenter’s assessment of the situation is accurate there could be 33%+ downside from current levels over the next 12-18 months.

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Idea Discussion

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