Seeking Alpha: Great Growth Doesn't Come Cheap With Cepheid

Investors looking for good plays in the diagnostics space have some difficult choices to make. High-quality companies like Becton Dickinson (BDX) or Trinity (TRIB) don't come all that cheap, while others like LipoScience (LPDX) have some serious issues to address. Cepheid (CPHD) is definitely in that former camp, as the company's GeneXpert system is an excellent automated molecular diagnostics platform that has garnered leading share in hospital-acquired infections and continues to leverage new test launches.

Cepheid is expensive by almost any metric, but med-tech investors are willing to pay for growth and Cepheid's strong share and differentiated platform could yet attract strategic buyers. These shares are definitely vulnerable to any operational stumble, not to mention a sudden shift in market sentiment regarding the appropriate premium for growth, but I wouldn't step in front of them (to short), nor would I rush to sell if I owned them.

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Great Growth Doesn't Come Cheap With Cepheid

Seeking Alpha: For Meridian Biosciences, Living Up To The Past Could Prove Challenging

Small-cap diagnostics company Meridian Bioscience (VIVO) is a curious study in quality and growth and how Wall Street processes those attributes. Meridian has built up a very strong testing business, with high-quality rapid point of care tests and a very cost-effective molecular diagnostics platform. Moreover, this company has posted a trailing compound annual revenue growth rate of 10% with returns on invested capital often above 20%. Yet, the stock has had some pronounced choppiness and is only up about 16% over the past five years - significantly lagging rivals like Cepheid (CPHD) and Quidel (QDEL).

I am concerned that there may be too much optimism baked into current expectations. I believe that Meridian is seeing more competition in its core C.dif and flu franchises than many sell-side analysts want to acknowledge and I am worried about the company's rivals launching additional automated platforms that can compete in Meridian's core market. Current expectations seem to be pricing in forward revenue growth of 9% per year, and I think that may be too demanding for this company.

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For Meridian Biosciences, Living Up To The Past Could Prove Challenging

Seeking Alpha: Cepheid Punished For Unwelcome Variability

Growth investors have an unspoken pact with companies - they'll ignore valuations and keep pushing stocks higher so long as there are no interruptions in the growth trajectory. Unfortunately, Cepheid (CPHD) is not only a growth stock favorite but a fairly small company as well, and variability and occasional stumbles is just part of the learning curve. While the earnings-related sell-off won't bring these shares anywhere near cheap, business continues to develop along very encouraging lines.

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Cepheid Punished For Unwelcome Variability

Seeking Alpha: Gen-Probe Looking To New Launches To Drive Momentum

Even for somebody like me who spent the better part of a decade as a sell-side med-tech analyst, the diagnostics industry is often a muddle. While large established players like Abbott Labs (ABT), Danaher (DHR), and Roche (RHHBY.PK) look to change with the times and hang on to lucrative market share, up-and-comers like
Cepheid (CPHD) and Gen-Probe (GPRO) look to shake up the market and drive significant growth through major advances in testing technology.

With a new testing platform on the way and an expanding menu of tests, Gen-Probe may be looking at capturing some real share over the next couple of years. At the same time, valuation leaves little room for mistakes.

Closing Out The Year With A Shrug
Gen-Probe's fiscal fourth quarter earnings were pretty much mediocre. Revenue growth of about 16% was a bit light, with generally better-than-expected performance in blood screening (up almost 31%) offsetting the clinical diagnostics business (up 13%).

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Gen-Probe Looking To New Launches To Drive Momentum

Investopedia: Will Qiagen's Restructuring Address The Real Problems?

I am a major skeptic when it comes to the benefits of so-called "restructuring." I don't generally believe that companies find prosperity by firing workers and pulling away from marketing or research and development (R&D). Moreover, I think it sends a very poor message on accountability when the same executives who hired those workers (usually as part of a plan to "invest in growth") are later praised (and rewarded with even bigger pay packages) for firing them.

Now Qiagen (Nasdaq:QGEN) is throwing its hat into the restructuring ring. The real question for shareholders, though, is whether this is another meaningless shuffling of the deck chairs, or whether management has a cogent plan to attain what the company really needs.


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Investopedia: Meridian Biosciences - Stealth Income Play

Although healthcare has a lot of attributes that would seem to support healthy dividends (protected markets, high margins, excellent cashflow), there's actually only a fairly limited list of quality income names. Once investors have worked past names like Johnson & Johnson (NYSE:JNJ) and Abbott Labs (NYSE:ABT), most investors have to start looking at pharmaceutical names or accept sub-3% yields.

And there's Meridian Biosciences (Nasdaq:VIVO). An established player in easy-to-use and affordable diagnostic tests, Meridian couples pretty decent growth (and growth potential) with a generous dividend payout. Although this stock is not cheap, it may, nevertheless, appeal to those investors looking for a healthy dividend with some growth upside. 

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http://stocks.investopedia.com/stock-analysis/2011/Meridian-Biosciences--Stealth-Income-Play-VIVO-ALR-CPHD-BDX-GPRO-LMNX-ABT1116.aspx

Investopedia: Cepheid Soaring

Molecular diagnostics company Cepheid (Nasdaq:CPHD) has long been one of my go-to names whenever I need a high-growth name that the Street did not quite fully understand and appreciate. The good news is that the stock has made my advice look good by more than tripling since the start of 2010. The bad news is that the stock has gone so far so fast that the company is simply going to have to become one of the MDx leaders to validate its current valuation. 

Another Great Quarter for Both New and Recurring Business  
Cepheid did everything it was supposed to do in the second quarter, and a little more besides. Revenue jumped 35% in the quarter as the company saw product revenue growth of 31%. This growth was fueled by an increase in systems revenue of 53% and reagent revenue of 40%, all of which more than offset the 25% decline in non-clinical revenue. Cepheid's international business is also doing well, growing more than twice the rate of the North American business this quarter. 


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http://stocks.investopedia.com/stock-analysis/2011/Cepheid-Soaring-CPHD-BIO-GPRO-BDX-LMNX0802.aspx