On Feb 7, we retained
), 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
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
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
Becton, Dickinson and Company
) both of which carry a Zacks Rank #2 (Buy) and are expected to
ATHENAHEALTH IN (ATHN): Free Stock Analysis
BECTON DICKINSO (BDX): Free Stock Analysis
CERNER CORP (CERN): Free Stock Analysis
MERGE HEALTHCAR (MRGE): Free Stock Analysis
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