Reiterate Cerner at Neutral - Analyst Blog
February 12 2013 - 9:50AM
Zacks
On Feb 7, we retained
Cerner Corporation (CERN), a leading healthcare
information technology (“HCIT”) solutions provider, at Neutral
after the company beat Zacks Consensus Estimates for revenues and
earnings in fourth quarter 2012. The results came despite
consolidation in an industry approaching maturity with a drop in
greenfield opportunities but growth in the replacement market.
Why the
Retention?
Cerner posted fourth-quarter 2012
adjusted earnings of 63 cents per share, beating the Zacks
Consensus Estimate of 60 cents per share and surpassing the
year-ago earnings of 52 cents a share. Revenues in the reported
quarter increased 15% year over year to $710.4 million, beating the
Zacks Consensus Estimate of $697 million.
Following the release of the fourth
quarter 2012 results on Feb 5, the Zacks Consensus Estimate for
2013 has moved up by just three pennies to $2.64 while the same for
2014 has remained stagnant at $3.15 during the same timeframe.
For the first quarter of 2013, the
company forecasts sales in a band of $690 million and $715 million
and earnings per share, before share based compensation expense, of
61 cents to 63 cents. Fresh bookings for the quarter are projected
between $720 million and $760 million. Cerner projects stock-based
compensation costs to dilute first quarter earnings per share by
about 4 cents.
For 2013, the company forecasts
sales in the region of $2,950 million and $3,050 million. Earnings
per share, before share based compensation expense, are expected to
be in the neighborhood of $2.75 and $2.82. Cerner projects
stock-based compensation costs to dilute earnings per share by
about 16 cents to 17 cents.
On the negative side, the federal
Stimulus program is gradually winding down. Moreover, the favorable
growth prospects appear to be factored into the stock price and the
risk-reward trade-off fairly poised. Cerner faces stiff competition
from other established HCIT players, such as
Athenahealth (ATHN).
Other Stocks to
Consider
We currently have a Zacks Rank #3
(Hold) on Cerner. However, we are more positive about other stocks
such as Merge Healthcare Incorporated (MRGE) and
Becton, Dickinson and Company (BDX) both of which
carry a Zacks Rank #2 (Buy) and are expected to do well.
ATHENAHEALTH IN (ATHN): Free Stock Analysis Report
BECTON DICKINSO (BDX): Free Stock Analysis Report
CERNER CORP (CERN): Free Stock Analysis Report
MERGE HEALTHCAR (MRGE): Free Stock Analysis Report
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