We upgrade our rating for
) to Outperform. Its first quarter earnings of 51 cents a share
beat the Zacks Consensus Estimate. Net income rose 37.4% year over
year to $88.7 million (or 51 cents per share) due to buoyant
Revenues for the first quarter rose 30% year over year to $641.2
million, handily beating the Zacks Consensus Estimate of $578
million. In the reported quarter, higher revenue from Support,
Maintenance and Services (up 18.4% to $403.9 million) was supported
by robust System sales (up 60.9% to $225.8 million).
Bookings amounted to $652.3 million, up 24% year over year, a
record high for the company in any first quarter. Total revenue
backlog came to $6.27 billion at the end of the first quarter, up
22% year over year, including $5.57 billion of contract backlog and
$704 million of support and maintenance backlog.
Cerner remains the trend setter among pure-play, publicly traded
healthcare IT (HCIT) vendors. We believe Cerner is 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 inpatient base that requires composite
clinically-focused applications in compliance with "meaningful use"
parameters, reimbursement challenges and complicated coding
problems. 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
) and many others in a crowded field. The company is developing
multiple growth drivers which will ensure its future growth.
The stock currently retains a Zacks #3 Rank, which translates
into a short-term "Hold" recommendation.
ATHENAHEALTH IN (ATHN): Free Stock Analysis
CERNER CORP (CERN): Free Stock Analysis Report
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