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Cepheid Breaks Losing Streak, Gains 4% (CPHD)

Today, molecular diagnostics company Cepheid (NASDAQ: CPHD), which was on a decline after reporting a fiscal 2012 third-quarter loss and a lowered annual revenue and income guidance, went to the brink of hitting a new 52-week low price. After two successive days of declines last week, the share price opened at $30.31, a few notches above the 52-week low of $29.90 per share, and recovered from the negative territory to pose a 4.2% gain at the end of the day.

The California-based company is involved in the development and manufacture of easy-to-use molecular systems and tests. Cepheid is focused on automating highly complex and time-consuming manual procedures such as genetic testing for organisms and developing applications for managing infectious diseases and cancer.

On October 18, Cepheid reported an increase in the fiscal 2012 third-quarter revenue to $80.5 million from $70.2 million in the prior-year corresponding period. The net loss for the third-quarter was $21.3 million, or $0.32 per share, compared to a net profit of $1.92 million, or $0.03 per share, in the third-quarter of fiscal 2011. The company had paid a litigation settlement charge of $15.1 million during the third-quarter.

Excluding the litigation settlement, employee stock-based compensation and amortization of purchased intangible assets, non-GAAP net income for the third-quarter decreased to $0.9 million from non-GAAP net income of $7.6 million in the year-ago corresponding quarter. According to FactSet, analysts expected the company to report $80.7 million in revenue and income of $0.01 per share for the reported quarter.

From a low of $34.53 per share in the last week of January 2012, Cepheid rose to $44.91 per share on February 6, owing to the fiscal 2011 fourth-quarter results that beat analysts’ estimates and a fiscal 2012 full-year guidance that was way better than what the analysts had expected. However, a cut in fiscal 2012 full-year guidance issued on July 19 brought the share price back to $32.13 per share on July 24. On August 6, Cepheid announced a series of agreements with the Bill & Melinda Gates Foundation, the United States President’s Emergency Plan for AIDS Relief (PEPFAR), the United States Agency for International Development (USAID) and UNITAID to buy-down the price of the Xpert MTB/RIF test for High Burden Developing Countries (HBDCs). The news propelled the share price back to $40.12 per share on September 7.

On September 26, Cepheid issued a fiscal 2012 third-quarter revenue warning that led the fall in the share price to $34.48 on October 1. Following the report of a third-quarter loss, the share price plunged to $30.59.

For the fiscal year 2012 ending December 2012, the company now expects to report total revenue of approximately $333 million, which is at the lower end of the previously issued revenue guidance range of $333 million to $347 million. Cepheid also lowered its full-year income guidance from break even to $0.04 per share to a net loss in the range of $0.42 to $0.40 per share. The company anticipates a non-GAAP net income in the range of $0.21 to $0.23 per share. On an average, analysts are expecting a net income of $0.01 per share and revenue of $332.9 million.

Cepheid ended the day at $31.87 per share, up $1.28 or 4.2% on a volume of 942,592 shares.

Published by Steve Hackney

Steve Hackney is a corporate finance professional with over 14 years of experience in cash management and investing. He earned a Bachelor of Science in Finance from Florida State University and holds a Certified Treasury Professional certification. Steve lives in Orlando, Florida with his family.