We maintain our recommendation on
) at Neutral. Cerner reported third quarter earnings per share of
56 cents, beating the Zacks Consensus Estimate by a penny and
surpassing the year-ago earnings of 45 cents per share. Net
income surged 25.4% year over year to $98.9 million.
Revenues in the third quarter rose 18% year over year to $676.5
million, well ahead of the Zacks Consensus Estimate of $654
Revenues increased on the back of growth in Support, Maintenance
and Services (up 16.4% to $432.3 million), robust System sales
(up 21.8% to $229.9 million) and higher revenues from Reimbursed
Travel (up 24.4% to about $14.3 million).
Bookings came in at $769.9 million, up 18% year over year, - a
record high for the company in any third quarter. Total revenue
backlog stood at $6.79 billion, up 20% year over year, including
$6.06 billion of contract backlog and $724 million of support and
Cerner remains the trend setter among pure-play, publicly traded
healthcare IT (HCIT) vendors. We believe Cerner has positioned
itself as one of the better placed clinical technology vendors to
benefit from high HCIT spending over the next few years. The
company is diversified not only on a global basis but serves both
hospitals and ambulatory outfits. Its integrated solutions have
captured market share.
We believe long-term investors may consider Cerner, which serves
a sizeable installed hospital base. It requires composite
clinically-focused applications complying with 'meaningful use'
requirements and tackling complex coding challenges. The company
has long-standing, integrated and seamless solutions for both
inpatient and ambulatory settings.
On the negative side, the federal Stimulus program will gradually
wind down. Cerner faces stiff competition from established HCIT
players, such as
Allscripts Healthcare Solutions
) and many others in a crowded field. The company is developing
multiple growth drivers which will ensure its future growth.
The stock carries a Zacks #3 Rank, which translates into a
short-term Hold rating.
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