On Nov 29, we retained our Neutral recommendation on
). We are encouraged about CERN's higher earnings in the
2013-third quarter and continuous bookings growth but
disappointed about revenue miss in the same quarter compared with
the Zacks Consensus Estimate as well as the company's own
On Oct 25, Cerner Corporation reported net earnings of $115.3
million or 33 cents per share for the third quarter of the year,
meeting the Zacks Consensus Estimate. This reflected a 16.6% rise
from $98.9 million and 17.9% from 28 cents in the comparable
quarter a year ago.
Revenues in the quarter grew 8% to $727.8 million, but it was
below the Zacks Consensus Estimate of $756 million. The revenue
growth was below CERN's own expectations due to decreased levels
of low-margin technology resale. However, notably, bookings rose
21% to the all-time third quarter high of $928.0 million.
Following the release of third quarter results, the Zacks
Consensus Estimate for 2013 earnings fell 0.75% to $1.32 per
share. However, the Zacks Consensus Estimate for 2014 earnings
rose 0.6% to $1.57 per share. Currently, Cerner has a Zacks Rank
CERN is the largest HCIT company and its wide footprint, wider
client base and composite array of solutions make it an ideal
candidate for investors seeking an exposure to the HCIT industry.
Moreover, Cerner enjoys a multitude of growth drivers,
particularly through its various partnerships such as
QualityWorks, DeviceWorks, etc. The company's recent deal with
Intermountain Healthcare expects to generate more than $50
million in annual revenues for the company.
BOSTON SCIENTIF (BSX): Free Stock Analysis
CERNER CORP (CERN): Free Stock Analysis
DIADEXUS INC (DDXS): Get Free Report
HILL-ROM HLDGS (HRC): Free Stock Analysis
To read this article on Zacks.com click here.
However, Cerner is expected to face significant headwind due to
winding down of the government Electronic Health Record (EHR)
program. Further, Cerner faces strong competition from its major
rival Epic Systems. Their attempts to enter the mass market will
increase competition and pressurize margins.
Other Stocks to Look For
While there are no other stocks from the medical information
systems industry that are currently worth a look, we consider
stocks from the broader medical products industry such as
Hill-Rom Holdings, Inc.
Boston Scientific Corporation
). Hill-Rom Holdings carries a Zacks Rank #1 (Strong Buy), while
both Boston Scientific and diaDexus carry a Zacks Rank #2