Financial Analysis: Cepheid (NASDAQ:CPHD) & Sequenom (SQNM)

Sequenom (NASDAQ: SQNM) and Cepheid (NASDAQ:CPHD) are both healthcare companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, institutional ownership, valuation, profitability, earnings, analyst recommendations and dividends.

Risk & Volatility

Sequenom has a beta of 1.17, indicating that its stock price is 17% more volatile than the S&P 500. Comparatively, Cepheid has a beta of 0.67, indicating that its stock price is 33% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and price targets for Sequenom and Cepheid, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sequenom 0 0 0 0 N/A
Cepheid 0 9 0 0 2.00

Cepheid has a consensus target price of $52.67, suggesting a potential downside of 0.54%. Given Cepheid’s higher probable upside, analysts clearly believe Cepheid is more favorable than Sequenom.

Profitability

This table compares Sequenom and Cepheid’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sequenom -21.54% N/A -25.05%
Cepheid -6.88% -11.54% -5.18%

Institutional and Insider Ownership

46.0% of Sequenom shares are held by institutional investors. Comparatively, 95.8% of Cepheid shares are held by institutional investors. 3.1% of Sequenom shares are held by company insiders. Comparatively, 4.2% of Cepheid shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Sequenom and Cepheid’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Sequenom N/A N/A N/A ($0.34) -7.03
Cepheid N/A N/A N/A ($0.69) -76.74

Cepheid is trading at a lower price-to-earnings ratio than Sequenom, indicating that it is currently the more affordable of the two stocks.

Summary

Cepheid beats Sequenom on 5 of the 8 factors compared between the two stocks.

About Sequenom

Sequenom, Inc. is a life sciences company. The Company serves patients and physicians by providing early patient management information. The Company operates through Sequenom Laboratories segment. It conducts its business as a molecular diagnostics clinical laboratory located in San Diego, California and Raleigh-Durham, North Carolina. Its testing focus is on prenatal health that includes molecular-based laboratory developed tests (LDTs). The Company’s diagnostic services are provided through its subsidiary, Sequenom Center for Molecular Medicine LLC (SCMM), doing business as Sequenom Laboratories. Sequenom Laboratories develops and validates its tests to be used as a testing service to physicians. Sequenom Laboratories is focused on developing and offering a menu of tests for prenatal continuum of care. The Sequenom Laboratories’ test offerings in the prenatal market include MaterniT21 PLUS LDT, HerediT CF test, SensiGene RhD test, VisibiliT test and Test Send-out Agreements.

About Cepheid

Cepheid is a molecular diagnostics company. The Company develops, manufactures and markets fully-integrated systems for testing in the Clinical and Non-Clinical markets. The Company’s systems enable molecular testing for organisms and genetic-based diseases by automating otherwise complex manual laboratory procedures. The Company’s systems integrate these steps and analyze biological samples in test cartridges. Its primary offering is the GeneXpert system, which integrates sample preparation in addition to Deoxyribonucleic acid (DNA) amplification and detection. The GeneXpert system is designed for a range of user types ranging from reference laboratories and hospital central laboratories to satellite testing locations, such as emergency departments and intensive care units within hospitals, as well as physician offices and other alternate site laboratories. It also offers the SmartCycler system, which integrates DNA amplification and detection to allow rapid analysis of a sample.

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