UPDATE: Piper Jaffray Downgrades Cepheid to Neutral, Lowers PT

In a report published Friday, Piper Jaffray & Co. downgraded its rating on Cepheid CPHD from Overweight to Neutral, and lowered its price target from $42.00 to $34.00. Piper Jaffray noted, “As a reminder, Cepheid experienced two manufacturing issues in FY12, with a plastic parts issue impacting its ability to meet customer cartridge demand in 3Q12, creating a $6.7M cartridge backlog and the need to put accounts on allocation as management resolved the issue. Given management intra-quarter commentary, we believe there is a risk Cepheid missed its end of November target for the end of allocation, leading to potential 4Q12 downside. Separately, we are modeling $371.6M in FY13 revenue (+12.1% yoy), significantly lower than current consensus ($398.2M, +20.0%). We admit our FY13 outlook could prove conservative, but we believe Street expectations are likely toward the upper end of management's (potentially higher than) initial FY13 guidance. Given these concerns, we are downgrading CPHD shares to Neutral with a $34 price target (was $42), based on 6x (was 7.6x) CY13 Clinical revenue + 1.5x CY13 Base revenue + net cash/share. The lower multiple is more appropriate given the potential risk to both 4Q12 and 2013 consensus revenue expectations.” Cepheid closed on Thursday at $34.09.