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Will Higher System Sales Drive Cerner's (CERN) Q3 Earnings?
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Cerner Corporation’s third-quarter 2017 results, scheduled for release on Oct 26, are expected to show steady growth in system sales — one of the major revenue components. While this could majorly drive third-quarter earnings, an expected improvement in revenues at all other segments should help the company generate solid results this season.
It is important to note that Cerner’s last quarter earnings met the Zacks Consensus Estimate. Similar to the prior quarter, strong growth in licensed software and subscriptions are expected to be the main factors driving systems revenues.
The Zacks Consensus Estimate for systems sales stands at $337 million for the third quarter. This reflects an increase of almost 12% from the year-ago quarter. Growth across acute and ambulatory EHR and sales of Population Health and Revenue Cycle solutions and services hold promise for Cerner.
Delving deeper into the fundamentals of the stock, let’s see how things are shaping up prior to this release.
Other Factors at Play
View Upbeat: For the third quarter, Cerner forecasts revenues between $1.27 billion and $1.33 billion. Adjusted earnings are expected in the band of 61 cents to 63 cents per share. Notably, the Zacks Consensus Estimate for revenues is currently pegged at $1.29 billion, signifying 9.2% growth on a year-over-year basis.
Furthermore, the Zacks Consensus Estimate for earnings stands at 62 cents per share, up 5.4% year over year. Solid participation in the EHR placement market has lent Cerner a competitive edge in the global space. Cerner offers an exposure to worldwide healthcare automation.
Growth in Support, Maintenance & Services: In the last quarter, management at Cerner announced that the company expects growth in the band 3% to 4% at the segment for the rest of the year. In fact, the Zacks Consensus Estimate for this segment’s revenues stands at $933 million, up 8.4% on a year-over-year basis and 1.7% sequentially.
Strategic Partnerships: Cerner follows a strategy of acquiring complementary businesses that allow the company to expand its solutions, device offerings and services, and grow its market and client base.In August, Cerner announced the formation of the Post-Acute Innovation Center with HealthSouth Corporation, the nation's largest provider of post-acute services. Furthermore, Cerner partnered with LifePoint Health, a large investor-owned health company that owns and operates more than 70 hospitals in the last quarter.
Bookings Update: It is important to note that bookings in the last quarter were $1.636 billion (an all-time high), up 16% on a year-over-year basis. Buoyed by solid trends, management expects third-quarter bookings in the band of $1.45 billion to $1.60 billion, with the midpoint reflecting 6% growth on a year-over-year basis.
The Zacks Consensus Estimate for third-quarter bookings stands at $1.54 billion. We believe solid growth in Ambulatory and CommunityWorks offerings will drive bookings in the third quarter.
However, our quantitative model does not conclusively show an earnings beat for Cerner this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat estimates. This is not the case here, as you will see below.
Zacks ESP: The Earnings ESP for Cerner is -0.32%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Cerner currently carries a Zacks Rank #2. Though a favorable Zacks Rank increases the predictive power of ESP, the company’s negative ESP makes surprise prediction difficult.
Stocks Worth a Look
Here are a few medical stocks worth considering as they have the right combination of elements to post an earnings beat this quarter.
Medpace Holdings Inc. (MEDP - Free Report) has an Earnings ESP of +0.47% and a Zacks Rank #3.
Henry Schein, Inc. (HSIC - Free Report) has an Earnings ESP of +1.23% and a Zacks Rank #3.
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Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
Will Higher System Sales Drive Cerner's (CERN) Q3 Earnings?
Cerner Corporation’s third-quarter 2017 results, scheduled for release on Oct 26, are expected to show steady growth in system sales — one of the major revenue components. While this could majorly drive third-quarter earnings, an expected improvement in revenues at all other segments should help the company generate solid results this season.
It is important to note that Cerner’s last quarter earnings met the Zacks Consensus Estimate. Similar to the prior quarter, strong growth in licensed software and subscriptions are expected to be the main factors driving systems revenues.
The Zacks Consensus Estimate for systems sales stands at $337 million for the third quarter. This reflects an increase of almost 12% from the year-ago quarter. Growth across acute and ambulatory EHR and sales of Population Health and Revenue Cycle solutions and services hold promise for Cerner.
Cerner Corporation Price and Consensus
Cerner Corporation Price and Consensus | Cerner Corporation Quote
Delving deeper into the fundamentals of the stock, let’s see how things are shaping up prior to this release.
Other Factors at Play
View Upbeat: For the third quarter, Cerner forecasts revenues between $1.27 billion and $1.33 billion. Adjusted earnings are expected in the band of 61 cents to 63 cents per share. Notably, the Zacks Consensus Estimate for revenues is currently pegged at $1.29 billion, signifying 9.2% growth on a year-over-year basis.
Furthermore, the Zacks Consensus Estimate for earnings stands at 62 cents per share, up 5.4% year over year. Solid participation in the EHR placement market has lent Cerner a competitive edge in the global space. Cerner offers an exposure to worldwide healthcare automation.
Growth in Support, Maintenance & Services: In the last quarter, management at Cerner announced that the company expects growth in the band 3% to 4% at the segment for the rest of the year. In fact, the Zacks Consensus Estimate for this segment’s revenues stands at $933 million, up 8.4% on a year-over-year basis and 1.7% sequentially.
Strategic Partnerships: Cerner follows a strategy of acquiring complementary businesses that allow the company to expand its solutions, device offerings and services, and grow its market and client base.In August, Cerner announced the formation of the Post-Acute Innovation Center with HealthSouth Corporation, the nation's largest provider of post-acute services. Furthermore, Cerner partnered with LifePoint Health, a large investor-owned health company that owns and operates more than 70 hospitals in the last quarter.
Bookings Update: It is important to note that bookings in the last quarter were $1.636 billion (an all-time high), up 16% on a year-over-year basis. Buoyed by solid trends, management expects third-quarter bookings in the band of $1.45 billion to $1.60 billion, with the midpoint reflecting 6% growth on a year-over-year basis.
The Zacks Consensus Estimate for third-quarter bookings stands at $1.54 billion. We believe solid growth in Ambulatory and CommunityWorks offerings will drive bookings in the third quarter.
However, our quantitative model does not conclusively show an earnings beat for Cerner this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat estimates. This is not the case here, as you will see below.
Zacks ESP: The Earnings ESP for Cerner is -0.32%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Cerner currently carries a Zacks Rank #2. Though a favorable Zacks Rank increases the predictive power of ESP, the company’s negative ESP makes surprise prediction difficult.
Stocks Worth a Look
Here are a few medical stocks worth considering as they have the right combination of elements to post an earnings beat this quarter.
INC Research Holdings, Inc. (INCR - Free Report) has an Earnings ESP of +2.02% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Medpace Holdings Inc. (MEDP - Free Report) has an Earnings ESP of +0.47% and a Zacks Rank #3.
Henry Schein, Inc. (HSIC - Free Report) has an Earnings ESP of +1.23% and a Zacks Rank #3.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>