UPDATE: ISI Group Initiates Cepheid with Underweight, $47 PT on Unfavorable Risk/Reward

ISI Group initiated its coverage on Cepheid

with an Underweight rating and a price target of $47 a share. ISI Group commented, "Our thesis for CPHD is based on our view that top-line momentum (25% to 30% growth) will be driven by increasing penetration of small-to-medium-sized hospitals and the rapid expansion of its test menu, although operating leverage will be somewhat offset by the growing HBDC business and the need to sustain high R&D investments. Finally, we contend that risk-reward is unfavorable at current levels as shares imply doubling of revenues over next 3 years (‘priced for perfection')." Cepheid closed at $43.43 on Monday.