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Cerner (CERN) Banks on RCM & PH Platforms, Competition Rife

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On Sep 22, we issued an updated research report on North Kansas City, MO-based Cerner Corporation (CERN - Free Report) – a leading global provider of healthcare information technology solutions (“HCIT”). The stock currently carries a Zacks Rank #3 (Hold).

We believe that Cerner has solid growth opportunities in the revenue cycle management (RCM) suite of solutions. In fact, the segment has been a strong contributor in recent times with RevWorks services delivering a solid performance. In fact, bookings in the second quarter of 2017 were $1.636 billion (an all-time high), up 16% on a year-over-year basis.

A secondary growth driver for Cerner is its Population Health (“PH”) Management platform. Notably, the company clinched a high number of large contracts for the PH platform in the last reported quarter.

Cerner offers exposure to worldwide healthcare automation. Its international operations provide a more diversified revenue stream. In the past, the company won contracts in the U.K. as well as the Middle East. Furthermore, Cerner constantly pursues complementary business acquisitions that enable it to expand solutions, device offerings and services.

On the flipside, the company operates in the HCIT space which is intensely competitive and fast evolving, subjecting it to rapid technological changes.

Share Price & Estimate Revision

Cerner had an impressive run on the bourse over the last six months, trading above the industry in terms of price performance. A glimpse at the price movement reveals that Cerner’s shares have gained 17.4%, comparing favorably with the 15.8% rise of the industry it belongs to.

 

On the flip side, the estimate revision trend for the current year remains unfavorable with eight estimates moving south over the last two months, compared with only two movement in the opposite direction. The company’s current estimate slipped 0.4% over the past two months.

Key Picks

A few better-ranked medical stocks are Edwards Lifesciences Corp. (EW - Free Report) , IDEXX Laboratories, Inc. (IDXX - Free Report) and Cogentix Medical, Inc. (CGNT - Free Report) .

While Edwards Lifesciences sports a Zacks Rank #1 (Strong Buy), IDEXX Laboratories and Cogentix Medical hold a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Edwards Lifesciences delivered an average earnings beat of 10.8% over the last four quarters. The company has a long-term expected earnings growth rate of 15.2%.

IDEXX Laboratories has an average earnings beat of 9.3% over the trailing four quarters. It has a long-term expected earnings growth rate of 19.8%.

Cogentix Medical came up with a positive earnings surprise of 200% in the last quarter. The stock represented a stellar return of 100.9% over the last year.

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