UPDATE: Bank of America Downgrades Cepheid on Fair Valuation

In a report published Tuesday, Bank of America analyst Derik de Bruin downgraded the rating on

from Buy to Neutral, but raised the price target from $39.00 to $41.00. In the report, Bank of America noted, “While we remain positive on CPHD's technology and progress in expanding its test menu (e.g., the recent FDA clearance of the company's TB test), we note that the company's execution has been mixed due to a variety of manufacturing problems which have hampered margin expansion. To overcome these problems, CPHD has begun to implement new programs to improve its production process as test cartridge yields remain suboptimal. Led by a new team with semiconductor industry experience, CPHD believes that it will improve its manufacturing efficiency over the next several quarters. That said, we think that the +16% move in CPHD shares since the company reported 2Q13 results (vs. a 1% decline for the S&P 500) already reflects incremental near-term margin improvement.” Cepheid closed on Monday at $39.05.