Baird analyst Richard Eastman expects high demand for Cepheid's SARS-CoV-2 test
Shares of Danaher (DHR) are slightly higher in a down day for the market after the company's subsidiary Cepheid announced it has received emergency use authorization from the Food and Drug Administration for Xpert Xpress SARS-CoV-2, a rapid molecular diagnostic test for qualitative detection of the virus causing COVID-19.
CEPHEID RECEIVES EUA FROM FDA: Over the weekend, Cepheid announced it has received Emergency Use Authorization from the U.S. Food and Drug Administration for Xpert Xpress SARS-CoV-2, a rapid molecular diagnostic test for qualitative detection of SARS-CoV-2, the virus causing COVID-19. The test has been designed to operate on any of Cepheid's more than 23,000 automated GeneXpert Systems worldwide, with a detection time of approximately 45 minutes. The test will begin shipping next week.
Commenting on the news, Baird analyst Richard Eastman noted that the approval matches the timeline Cepheid had been expecting and communicating. The analyst expects high demand for this test. However, Eastman also views it as reasonable to expect COVID-19 testing will cannibalize other MDx tests that otherwise would be run on the company's instruments. Additionally, government directives globally are discouraging elective procedures and he expects non-COVID-19 inpatient/outpatient volumes to decline meaningfully across most health systems. The analyst added that Cepheid is also pursuing a CE-IVD mark. Eastman reiterated an Outperform rating and $136 price target on Danaher shares.
WHAT'S NOTABLE: Danaher announced last week that the U.S. Federal Trade Commission has accepted the proposed consent order in connection with Danaher's definitive agreement with General Electric (GE) to acquire the Biopharma business of GE Life Sciences. The acceptance by the FTC satisfies all required antitrust clearances needed to be obtained for the acquisition of GE Biopharma by Danaher. In addition to the FTC, the transaction has also been cleared by the European Commission and the Brazilian, Chinese, Israeli, Japanese, Korean and Russian antitrust authorities. The closing of the acquisition remains subject to other customary closing conditions set forth in the purchase agreement. Danaher currently expects that the acquisition will be completed on March 31, 2020.
PRICE ACTION: In morning trading, shares of Danaher have gained 1.3% to $125.40 while the broader S&P 500 is down roughly 3.5%.
Keywords: Coronavirus, virus, outbreak, Covid-19, pandemic, test