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Cerner (CERN): What's in the Cards this Earnings Season?
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North Kansas City, MO-based Cerner Corporation , a leading global provider of healthcare information technology solutions (“HCIT”), is set to report fourth-quarter 2016 results, after the closing bell on Feb 9.
In the third quarter, the company posted earnings of 55 cents per share, which missed the Zacks Consensus Estimate by a penny. However, earnings improved 10% on a year-over-year basis.
Notably, despite a miss in the last reported quarter, the company’s earnings topped the Zacks Consensus Estimate in the last four trailing quarters, with an average beat of 1.9%.
Let’s see how things are shaping up prior to this quarter.
Stock Performance
A glimpse at the stock price performance over the past three months reveals a negative return of roughly 7.7%, wider than the Zacks Medical Information Systems industry’s decline of 2.3%.
Furthermore, the stock’s current return also compares unfavorably with the S&P 500’s 8.3% over the same time.
Meanwhile, the current year projected sales growth for Cerner is pegged at 9.74%, way below the industry’s 16.3%, signaling trouble down the road.
Factors at Play
We believe that Cerner’s strong product portfolio will help it to boost its customer base. The frequent contract wins reflect growing traction. Furthermore, the company has strong growth opportunities in the revenue cycle management (RCM) and ambulatory space.
The company forecasts revenues between $1.225 billion and $1.300 billion for fourth-quarter 2016. The mid-point of the guided range reflects 7% year-over-year growth. Cerner expects booking revenues in the band of $1.425 billion to $1.575 billion and the midpoint reflects 11% growth. Adjusted earnings are projected in the band of 60 cents to 62 cents for the fourth quarter, flat on a year-over-year basis at mid-point.
Of the major developments in the quarter, Cerner’s extended partnership with the University of Missouri is notable. The duo extended their existing HealtheIntent population health management platform across the Health Network of Missouri (HNM). Notably, HNM is a joint venture of six independent health care organizations that use different electronic health record (EHR) systems (read more: Cerner Extends HNM Partnership with University of Missouri).
Of the negatives, the HCIT market is highly competitive which exerts considerable pressure on both pricing and margins. Cerner, a major player in this space, has been facing cut-throat competition from reputed names such as Allscripts Healthcare Solutions, Epic Systems, GE Healthcare Technologies, McKesson Corp, Quality Systems among others. This has impacted the company’s pricing and margins to a great extent. Stringent hospital budgets exert further pressure on pricing.
Estimate Revision Trend
Cerner’s estimate revision trend for the current year has been mixed with one estimate moving north and one in the opposite direction over the last two months.
Coming to the current quarter estimate revisions, one estimate moved upward with no movement in the opposite direction over the same time frame.
Notably, the current quarter estimate is pegged at 57 cents while the full-year estimate stands at $2.14.
Earnings Whispers
Our quantitative model doesn’t point to an earnings beat for Cerner this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: The Earnings ESP for Cerner is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 57 cents. You can uncover the best stocks to buy or sell before they’re reported with ourEarnings ESP Filter.
Zacks Rank: Cerner carries a Zacks Rank #4 (Sell). Notably, we caution against stocks with a Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
DaVita HealthCare Partners Inc. (DVA - Free Report) has an Earnings ESP of +4.40% and a Zacks Rank #3. Additionally, on an average, the stock represented a positive surprise of almost 3.77% in the last four trailing quarters.
Envision Healthcare Corporation has an Earnings ESP of +2.50% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here. The stock posted a positive earnings surprise of 1.92% in the last reported quarter.
HCA Holdings, Inc. (HCA - Free Report) has an Earnings ESP of +1.12% and a Zacks Rank #3. The stock posted an earnings beat in the last four quarters, the average being 14.01%.
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Cerner (CERN): What's in the Cards this Earnings Season?
North Kansas City, MO-based Cerner Corporation , a leading global provider of healthcare information technology solutions (“HCIT”), is set to report fourth-quarter 2016 results, after the closing bell on Feb 9.
In the third quarter, the company posted earnings of 55 cents per share, which missed the Zacks Consensus Estimate by a penny. However, earnings improved 10% on a year-over-year basis.
Notably, despite a miss in the last reported quarter, the company’s earnings topped the Zacks Consensus Estimate in the last four trailing quarters, with an average beat of 1.9%.
Let’s see how things are shaping up prior to this quarter.
Stock Performance
A glimpse at the stock price performance over the past three months reveals a negative return of roughly 7.7%, wider than the Zacks Medical Information Systems industry’s decline of 2.3%.
Furthermore, the stock’s current return also compares unfavorably with the S&P 500’s 8.3% over the same time.
Meanwhile, the current year projected sales growth for Cerner is pegged at 9.74%, way below the industry’s 16.3%, signaling trouble down the road.
Factors at Play
We believe that Cerner’s strong product portfolio will help it to boost its customer base. The frequent contract wins reflect growing traction. Furthermore, the company has strong growth opportunities in the revenue cycle management (RCM) and ambulatory space.
The company forecasts revenues between $1.225 billion and $1.300 billion for fourth-quarter 2016. The mid-point of the guided range reflects 7% year-over-year growth. Cerner expects booking revenues in the band of $1.425 billion to $1.575 billion and the midpoint reflects 11% growth. Adjusted earnings are projected in the band of 60 cents to 62 cents for the fourth quarter, flat on a year-over-year basis at mid-point.
Of the major developments in the quarter, Cerner’s extended partnership with the University of Missouri is notable. The duo extended their existing HealtheIntent population health management platform across the Health Network of Missouri (HNM). Notably, HNM is a joint venture of six independent health care organizations that use different electronic health record (EHR) systems (read more: Cerner Extends HNM Partnership with University of Missouri).
Of the negatives, the HCIT market is highly competitive which exerts considerable pressure on both pricing and margins. Cerner, a major player in this space, has been facing cut-throat competition from reputed names such as Allscripts Healthcare Solutions, Epic Systems, GE Healthcare Technologies, McKesson Corp, Quality Systems among others. This has impacted the company’s pricing and margins to a great extent. Stringent hospital budgets exert further pressure on pricing.
Estimate Revision Trend
Cerner’s estimate revision trend for the current year has been mixed with one estimate moving north and one in the opposite direction over the last two months.
Coming to the current quarter estimate revisions, one estimate moved upward with no movement in the opposite direction over the same time frame.
Cerner Corporation Price and EPS Surprise
Cerner Corporation Price and EPS Surprise | Cerner Corporation Quote
Notably, the current quarter estimate is pegged at 57 cents while the full-year estimate stands at $2.14.
Earnings Whispers
Our quantitative model doesn’t point to an earnings beat for Cerner this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: The Earnings ESP for Cerner is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 57 cents. You can uncover the best stocks to buy or sell before they’re reported with ourEarnings ESP Filter.
Zacks Rank: Cerner carries a Zacks Rank #4 (Sell). Notably, we caution against stocks with a Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
DaVita HealthCare Partners Inc. (DVA - Free Report) has an Earnings ESP of +4.40% and a Zacks Rank #3. Additionally, on an average, the stock represented a positive surprise of almost 3.77% in the last four trailing quarters.
Envision Healthcare Corporation has an Earnings ESP of +2.50% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here. The stock posted a positive earnings surprise of 1.92% in the last reported quarter.
HCA Holdings, Inc. (HCA - Free Report) has an Earnings ESP of +1.12% and a Zacks Rank #3. The stock posted an earnings beat in the last four quarters, the average being 14.01%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>