Why Cepheid Shares Are Climbing

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 Cepheid (NASDAQ: CPHD  ) have gained 14% today after the company bested analyst expectations on both top and bottom lines for its fiscal fourth quarter.

So what: Cepheid had been expected to post revenue of $102.2 million and a loss of $0.11 per share for the quarter; instead, the molecular diagnostics company trounced both estimates by reporting a 22% year-over-year gain in revenue to $113.3 million and adjusted earnings of $0.03 per share. The company's generally accepted accounting principles net loss was $0.15 per share for the quarter, but $0.06 of that was the result of a one-time restructuring charge. Cepheid's full-year guidance also impressed the Street by coming in ahead of expectations.

Now what: Cepheid now expects full-year revenue for 2014 in the range of $446 million-$461 million range, while adjusted EPS is expected to fall between $0.24 and $0.29 per share. The company also expects a GAAP net loss of between $0.26 and $0.21 per share for the year, but the adjusted number is what analysts were looking at most closely, and it compares quite favorably to the $0.01 EPS consensus.

The company's top line is certainly growing -- its 2014 guidance midpoint is 13% higher than 2013's full-year revenue of $401.3 million -- but it hasn't proven that it can be profitable without accounting tricks. In addition, its annual free cash flow loss of $32.5 million was much worse than its annual net loss of $18 million. It's also worth pointing out that the midpoint of revenue guidance predicts a lower growth rate than 2013's 17% growth rate from 2012. There's a lot of hope and hype around Cepheid right now, but the numbers don't seem to support its valuation. I'd hang back for the time being.

Want more news and updates? Add Cepheid to your Watchlist now.

Looking for a few real growth stocks?
They said it couldn't be done. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2819372, ~/Articles/ArticleHandler.aspx, 11/27/2014 4:05:29 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement