Cepheid (CPHD) has decided to present at the upcoming J.P. Morgan Healthcare Conference in San Francisco, California on Thursday, January 12, 2012.
Cepheid, headquartered in Sunnyvale, California is a molecular diagnostics company, which primarily develops, manufactures and markets fully integrated systems for genetic analysis in the Clinical market. Cepheid is focusing on those applications where rapid molecular testing is particularly important, such as identifying infectious disease and cancer in the clinical molecular diagnostic market; food, agricultural and environmental testing in the industrial market; and identifying bio-terrorism agents in the biothreat market.
The company currently offers 11 tests in the US and 12 outside the US. Although the company is one of the leading players in the HAI segment, it is also intending to expand in non-HAI markets, which includes critical infectious diseases, women’s health, and oncology and genetics. Additional tests under development in the areas of HIV, HCV and HPV are targeted to be released in Europe within the 2012-2013 timeframe. The company is also targeting up to 7 CLIA waived tests by the end of 2016, which would significantly improve the market potential of the GeneXpert system outside of the hospital market.
Apart from expansion of its menu, Cepheid is also looking toward expanding its market reach in both the US and international market. We expect the company to provide an update regarding these steps at the upcoming conference. Since the company records only 20% of its Clinical revenues from outside the US, it plans to expand its presence overseas.
The company plans to bolster its direct sales force internationally with Germany being the earliest (2012) as it has the largest revenue opportunity in Europe, given its upcoming infection control mandate. Cepheid expects to go directly in Italy in 2013. The company has established its operation in China and Japan and is working on securing regulatory approval for certain Xpert products there, which albeit would be a lengthy process.
However, Cepheid remains cautious about the general capital spending environment in both the US and Europe. In fact, the company is less optimistic about the near-term economic environment than ever in the past. The company also witnessed distributors in some countries reducing their inventory levels due to the ongoing economic uncertainty in that region. The current macro environment is taking a toll on other diagnostic players as well such as Qiagen (QGEN), among others. The company is expected to share its views on the current scenario.
We are currently Neutral on Cepheid, in line with the short-term Zacks # 3 Rank (“Hold”).
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