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Stock Slide, Analyst Cuts Follow Cepheid Q3 Preliminary Earnings Announcement

NEW YORK (GenomeWeb) – Cepheid's stock tumbled today after it announced on Tuesday that its third quarter financial results are expected to miss the consensus Wall Street estimates on the top and bottom lines. 

Several investment banks also lowered their ratings for the company's stock or reduced their revenue and/or earnings estimates. 

In afternoon trading on the Nasdaq today, Cepheid's shares were down more than 17 percent to $32.87 amid heavy volume after the company said that it anticipates preliminary revenue of about $126.5 million for the third quarter, which would be short of the analysts' average estimate of $127.8 million. Net loss per share is anticipated to be $.32, above the consensus Wall Street estimate of $.26 per share. On an adjusted basis, the per-share loss is expected to be about $.13 for the quarter.

In response, Raymond James analyst Nicholas Jansen today lowered his rating on Cepheid's shares to Market Perform from a previous Outperform rating and said that although he believes the company is a "unique asset" in the molecular diagnostics space, "given the frustrating number of starts and fits over the past four years, we now expect the multiple to be impaired until investors see management consistently execute." 

He added that investors may see as unattainable the 2017 financial targets that Cepheid's management has set, and that he is skeptical about the firm's new growth drivers in the point-of-care and cancer markets, given the competitive landscape. 

Jansen also lowered his full-year 2015 revenue estimate for Cepheid to $540 million from an earlier projection of $550 million. He estimated Cepheid's net loss per share in the fourth quarter to be $.65, an increase from a prior estimate of $.50. On a non-GAAP basis, he expects 2015 EPS to be $.08, down from a prior estimate of $.25. 

Several other investment banks maintained their ratings for Cepheid but lowered their price targets and/or estimates. Piper Jaffray kept its Outperform rating, but lowered the price target on the company's stock to $62 from $66. It also shaved its 2015 revenue estimate to $538.1 million from $544.8 million. Its net loss per share estimate was increased to $.72 from $.51. 

Jefferies lowered its price target on Cepheid's stock to $35 from $55 and trimmed its 2015 revenue estimate to $538.5 million from $548.5 million. It also increased its 2015 net loss per share estimate to $.65 from $.50. It maintained its Hold rating on the firm. 

And Cowen kept its Outperform rating on Cepheid but decreased its 2015 revenue estimate to $537.6 million from $548.2 million. It reduced its 2015 EPS to $.07 from $.24 and lowered its price target on the company's shares to $42 from $64.