Within the higher-growth molecular diagnostics segment of diagnostics, Cepheid (CPHD) remains one of the real up-and-comers. Roche (OTCQX:RHHBY)
still has quite a bit more market share than Cepheid (and/or anybody
else), but Cepheid stands shoulder to shoulder with big names like Abbott (ABT), Becton Dickinson (BDX), and Hologic (HOLX)
and actually has leading share in terms of systems placement. Margins
are still a "build it and they will come" sort of proposition, but as
Cepheid continues to develop and launch high-volume tests, it should be
in position to reap significant leverage down the road.
The
concern here is that the market is already a long ways down that road in
terms of valuation. Even if the company can more than double its share
of the MDx market and generate FCF margins on par with the best
companies, the shares are already well ahead of the implied value.
Assigning Cepheid the typical top-of-the-range med-tech growth multiple
of 8.0x forward sales produces a more attractive $55 target, more than
20% above today's price, but that multiple may be harder to maintain if
the market really is turning away from aggressive growth stories in the
healthcare space.
Continue reading here:
Cepheid's Results And Shares Are On Different Paths
No comments:
Post a Comment