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Cepheid shares rise on 4Q guidance

NEW YORK (AP) -- Shares of molecular diagnostics company Cepheid rose Tuesday after the company said that demand for several of its GeneXpert tests were stronger than expected.

THE SPARK: Cepheid said it will report about $92 million in revenue in the fourth quarter. That's a bit less than the company and Wall Street anticipated, but Cepheid said that higher-than-expected GeneXpert sales led to a loss of 1 to 3 cents per share for the period, better than it had anticipated.

Analysts were forecasting a loss of 2 cents per share, according to FactSet. They were expecting $93.5 million in revenue on average.

The company will report full results for the October-December quarter on Jan. 24.

THE BIG PICTURE: Cepheid's GeneXpert testing system can diagnose illnesses including tuberculosis and influenza, drug-resistant MRSA infections, C. difficile, and enteroviral meningitis, and at the end of December the company won approval for a test that detects chlamydia and gonorrhea.

But the Sunnyvale, Calif., company had some manufacturing problems which delayed orders. It said Tuesday that it made "significant progress" to returning to normal operations.

Still, some orders for MRSA and flu tests remain to be filled.

Cepheid reported about $72 million in commercial revenue, about $3 million more than it expected. Revenue from its business which sells tuberculosis tests to developing countries totaled about $10 million, or $6 million below its expectations. The commercial business is the more profitable of the two divisions.

THE ANALYSIS: Cantor Fitzgerald analyst Sung Ji Nam said results from the developing country program have been shaky, which is hurting Cepheid stock even though the commercial business provides the bulk of Cepheid's revenue. She maintained a "Hold" rating on the shares with a price target of $38.

SHARE ACTION: Cepheid shares rose $1.19, or 3.6 percent, to close at $33.97 on Tuesday. The stock is up 21 percent from a 52-week low of $28.12 on Nov. 15.