Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of diagnostic equipment provider Cepheid (Nasdaq: CPHD) are spiking 20% today after the company blew its fourth-quarter earnings results and 2012 outlook out of the water.

So what: For the quarter, Cepheid was able to grow sales by 36% on the back of a 54% jump in system sales and a 32% rise in reagent and disposable products. It also sold 175 GeneXpert DNA detection systems to commercial clinical businesses during the quarter. This all translated into a $0.14 quarterly profit (excluding one-time items) and sales of $80.1 million, which compares to the loss of $0.01 on revenue of $73.8 million that Wall Street had been looking for. 2012 guidance also came in ahead of schedule with Cepheid forecasting a profit range of $0.55 to $0.60 with sales of $333 million to $347 million. Wall Street expectations were for $0.41 and $334.2 million.

Now what: Shareholders certainly have every reason to be excited this week. Earlier in the week, Roche offered $5.7 billion to buy Illumina (Nasdaq: ILMN), a life sciences competitor to Cepheid, which now has the sector abuzz as to which company could be the next buyout target. Today's results just show that the company's genetic detection systems are being well accepted by hospitals and growth is showing little signs of slowing. I'd be lying if I said I wasn't a little concerned about Cepheid's valuation. Even if it hits the high end of its 2012 outlook, at 69 times forward earnings, most of the compelling value is gone. For now I'm taking a wait-and-see approach, but this is definitely a growth story worth watching.

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