We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Cerner (CERN) Strong on EHR Prospects, Competition Intense
Read MoreHide Full Article
On Aug 20, we issued an updated research report on Cerner Corporation . While the company rides on solid EHR (Electronic Health Record) prospects, margins continue to decline.
The stock currently carries a Zacks Rank #3 (Hold).
Over the last 30 days, the Zacks Consensus Estimate for Cerner’s current-year earnings per share rose by a penny to $2.51.
The trend of EHR services in the U.S. MedTech space has been gradually gaining prominence. Lately, Cerner witnessed a slew of developments in its EHR platform. The company announced a 10-year partnership with Lumeris, an award-winning health plan and value-based care managed services operator.
Moreover, Cerner's EHR platform and revenue cycle management solutions have been implemented by a number of health facilities. Additionally, the Department of Veterans Affairs (VA) announced an agreement with Cerner Government Services, Inc. — a wholly owned subsidiary of Cerner Corporation.
In the recently reported second quarter of 2018, Cerner witnessed a year-over-year upside in bookings. Bookings totaled $1.78 billion, up 8.5%. The Middle East and the United Kingdom also contributed to bookings. Furthermore, bookings at the licensed software unit shot up, driving Cerner’s top line.
For the third quarter of 2018, Cerner expects revenues from bookings between $1.45 billion and $1.65 billion.
The company’s international operations also provide a more diversified revenue stream. Earlier this year, the company signed a new contract for the Region Skåne in Sweden. Also, Cerner saw stronger contributions from the U.K., Germany and Canada.
By the end of the second quarter of 2018, revenues from outside the United States increased 22% on a year-over year basis to $166 million.
Headwinds
By the end of second-quarter 2018, gross margin was 82.5%, down 20 basis points (bps). Operating margin in the reported quarter was 15.2%, down 410 bps on a year-over-year basis. Per management, adjusted operating margin in the quarter was 18.7%, down from the year-ago quarter's 23%. Management further stated that higher non-cash expenses, investments in Works businesses and an increased mix of Works revenues kept margins under pressure.
For the coming quarters, the company anticipates a few headwinds that might deal a blow to operating margins in 2018.
Additionally, the market for HCIT solutions, devices and services is intensely competitive and is subject to rapid technological changes. Competition is fierce with well reputed names such as Allscripts Healthcare Solutions (MDRX - Free Report) , Epic Systems, GE Healthcare Technologies, McKesson Corp (MCK - Free Report) , Quality Systems and others. The intensity of competition may exert pressure on both pricing and margins.
Price Performance
Over the past year, shares of Cerner have rallied 1.2% compared with the industry’s 13.1% rise.
Key Pick
A better-ranked stock in the broader medical space is Integer Holdings Corporation (ITGR - Free Report) .
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Cerner (CERN) Strong on EHR Prospects, Competition Intense
On Aug 20, we issued an updated research report on Cerner Corporation . While the company rides on solid EHR (Electronic Health Record) prospects, margins continue to decline.
The stock currently carries a Zacks Rank #3 (Hold).
Over the last 30 days, the Zacks Consensus Estimate for Cerner’s current-year earnings per share rose by a penny to $2.51.
Cerner Corporation Price and Consensus
Cerner Corporation Price and Consensus | Cerner Corporation Quote
What’s Favoring Cerner?
The trend of EHR services in the U.S. MedTech space has been gradually gaining prominence. Lately, Cerner witnessed a slew of developments in its EHR platform. The company announced a 10-year partnership with Lumeris, an award-winning health plan and value-based care managed services operator.
Moreover, Cerner's EHR platform and revenue cycle management solutions have been implemented by a number of health facilities. Additionally, the Department of Veterans Affairs (VA) announced an agreement with Cerner Government Services, Inc. — a wholly owned subsidiary of Cerner Corporation.
In the recently reported second quarter of 2018, Cerner witnessed a year-over-year upside in bookings. Bookings totaled $1.78 billion, up 8.5%. The Middle East and the United Kingdom also contributed to bookings. Furthermore, bookings at the licensed software unit shot up, driving Cerner’s top line.
For the third quarter of 2018, Cerner expects revenues from bookings between $1.45 billion and $1.65 billion.
The company’s international operations also provide a more diversified revenue stream. Earlier this year, the company signed a new contract for the Region Skåne in Sweden. Also, Cerner saw stronger contributions from the U.K., Germany and Canada.
By the end of the second quarter of 2018, revenues from outside the United States increased 22% on a year-over year basis to $166 million.
Headwinds
By the end of second-quarter 2018, gross margin was 82.5%, down 20 basis points (bps). Operating margin in the reported quarter was 15.2%, down 410 bps on a year-over-year basis. Per management, adjusted operating margin in the quarter was 18.7%, down from the year-ago quarter's 23%. Management further stated that higher non-cash expenses, investments in Works businesses and an increased mix of Works revenues kept margins under pressure.
For the coming quarters, the company anticipates a few headwinds that might deal a blow to operating margins in 2018.
Additionally, the market for HCIT solutions, devices and services is intensely competitive and is subject to rapid technological changes. Competition is fierce with well reputed names such as Allscripts Healthcare Solutions (MDRX - Free Report) , Epic Systems, GE Healthcare Technologies, McKesson Corp (MCK - Free Report) , Quality Systems and others. The intensity of competition may exert pressure on both pricing and margins.
Price Performance
Over the past year, shares of Cerner have rallied 1.2% compared with the industry’s 13.1% rise.
Key Pick
A better-ranked stock in the broader medical space is Integer Holdings Corporation (ITGR - Free Report) .
Integer Holdings has an expected long-term earnings growth rate of 15%. The stock flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>