Cerner Corporation (CERN - Free Report) is currently plagued with headwinds like downbeat guidance and stiff competition in niche space. Its no wonder that the company is underperforming in the MedTech space at the moment.
In the past year, Cerner’s stock has lost 8.9%, against the industry’s rally of 8.6%.
In the last 60 days, the Zacks Consensus Estimate for Cerner’s earnings for ongoing quarter has declined 6.2% to 61 cents per share. The stock has Growth Score of C, which dampens investors’ confidence in the stock. Our research shows that stocks with Growth Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy), outperform most stocks.
Further, the company’s Zacks Rank #5 (Strong Sell) only reflects its innate weakness.
Consequently, it will be prudent to dump the stock from your portfolio as chances of favorable returns in the near term appear bleak.
Why Should You Offload?
For the second quarter of 2018, Cerner expects revenues in the range of $1.31-$1.36 billion. The Zacks Consensus Estimate for second-quarter revenues is pegged at $1.33 billion, within the expected range.
Cerner expects 2018 revenues in the range of $5.33-$5.45 billion, down from the previous range of $5.45 billion to $5.65 billion. Notably, for the current year, the Zacks Consensus Estimate for revenues of $5.38 billion, within the guided range.
For 2018, Cerner anticipates adjusted earnings per share of $2.45-$2.55, down from the prior guidance of $2.57-$2.73. The Zacks Consensus Estimate for 2018 earnings per share is pegged at $2.51 cents, lying within the projected range.
Soft Segmental Performances
Cerner’s core segments, Licensed software and Subscriptions, have exhibited soft performance of late. In the first quarter of 2018, revenues in the Licensed software segment fell 5.3% to $134.8 million, on a year-over-year basis. Per management, lower than anticipated levels of licensed software bookings in the quarter impacted the revenues.
Moreover, Subscription revenues grossed $76.6 million, plunging 32.4% on a year-over-year basis. Lower-than expected subscription bookings marred growth in the segment.
At present, Cerner faces intense competition in the industry. Reputed names like Allscripts Healthcare Solutions, Epic Systems, GE Healthcare Technologies, McKesson Corp and Quality Systems pose significant challenge along with denting pricing and margins.
A few better-ranked stocks in the broader medical space are Genomic Health (GHDX - Free Report) , Abiomed (ABMD - Free Report) and Stryker Corporation (SYK - Free Report) .
Genomic Health has an expected earnings growth rate of 187.5% for the ongoing quarter. The stock sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Abiomed has a projected long-term earnings growth rate of 27%. The stock sports a Zacks Rank #1.
Stryker has a projected long-term earnings growth rate of 9.7%. The stock carries a Zacks Rank #2.
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 >>