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Craig-Hallum Upgrades Cepheid to Buy

NEW YORK (GenomeWeb) – Craig-Hallum Capital Group today upgraded shares of Cepheid to a Buy rating, based on recent deals with Quest Diagnostics and Laboratory Corporation of America and an expansion of its product portfolio.

Analyst Bill Bonello upgraded the shares from a previous Hold rating and raised the price target to $75 per share from $52.

"Cepheid is in the midst of a powerful transformation, rapidly expanding its clinical offering and customer reach," Bonello wrote in a research note. In addition to securing deals with the two largest laboratory companies in the US, Quest and LabCorp, Cepheid has expanded into virology and sexual health, developed a new module for cancer profiling on the GeneXpert system, and submitted its first CLIA-waived test, he said.

"We expect Cepheid to emerge as a leading molecular diagnostics franchise addressing a myriad of different clinical and customer segments," Bonello said. "With the currently slated pipeline of tests, the company's addressable market should increase by at least 50 percent over the next two years to more than $5 billion."

In addition to revenue from new tests, he projected that revenue from the firm's current portfolio could grow 20 percent per year for several years.

Shares of Cepheid trading on the Nasdaq were up almost 2 percent to $60.84 in afternoon trading.