Wedbush Reaffirms Neutral Rating On CPHD

Wedbush is reaffirming its Neutral rating on Cepheid (NASDAQ: CPHD).

“Shares of CPHD are up 25% over the last three months versus 5% appreciation in the S&P 500 over the same period,” Wedbush writes. “While we are not hearing anything negative from the channel, we remain NEUTRAL until we become more comfortable with the 2011 instrument placement opportunity, TB rollout, and potential upside from C.diff.”

“We are modeling roughly 23% y/y 1Q11 growth in the clinical business and believe the company may need to post >30% to drive shares higher. Our $25 price target assumes a 6x 2011 EV/Sales multiple which is justified to us given the clinical diagnostics growth profile, nearing profitability, future royalty roll-off, growing test menu, and scarcity value. Shares are trading at a premium to the group on a 2011E EV/Sales multiple basis (7x vs. the group median of 3.6x).”

Cepheid closed Monday at $29.20.