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Cerner (CERN) to Report Q1 Earnings: What's in the Offing?

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Cerner Corporation CERN is scheduled to release first-quarter 2021 results on May 5, after the closing bell. In the last reported quarter, the company matched the consensus mark. Further, it beat estimates in three of the trailing four quarters and matched once, the average surprise being 2.7%.

Q1 Estimates

The Zacks Consensus Estimate for first-quarter earnings is pegged at 74 cents, suggesting an improvement of 4.2% from the year-ago quarter. The same for revenues stands at $1.40 billion, indicating a decline of 0.8% from the year-ago reported figure.

Factors to Note

Cerner continues to benefit from electronic health record (EHR), electronic patient record (EPR) or electronic medical record (EMR) platforms that provide patient care in acute inpatient and outpatient settings. This is likely to get reflected in the company’s first-quarter results.

Moreover, adjusted earnings per share (EPS) is anticipated to be 72-76 cents in the first quarter. The mid-point of this range is 4% higher than the year-ago quarter. Per management, the company’s capability to offset the impact of lower revenues due to the pandemic and lost earnings from divested businesses on account of its cost optimization initiatives to date have been contributing to EPS growth.

Cerner Corporation Price and EPS Surprise

Cerner Corporation Price and EPS Surprise
Cerner Corporation Price and EPS Surprise

Cerner Corporation price-eps-surprise | Cerner Corporation Quote

In September 2020, Cerner inked a deal with Finland regional leadership with an aim to deliver more coordinated and efficient access to health and social services via a government-sponsored set of standards. Notably, this collaboration will not only strengthen Cerner’s foothold in the healthcare information technology (HCIT) space but also expand its presence geographically.

Further, in the same month, the company announced a collaboration with Vynca — a national leader in advance care planning solutions — to streamline the complicated advance care planning procedure for individuals and families, caregivers and clinicians in a bid to ensure patients’ end-of-life preferences and needs are met every single time. The partnership will allow Cerner and Vynca to break down the digital barrier between legal documents and EHRs, thereby making it simpler for clinicians to carry out the process.

In December 2020, the company announced that it is leveraging on its deal with Xealth to enable health systems to provide new centralized digital ordering and monitoring to clients. The partnership will help health systems to select, manage and deploy digital tools and applications, while providing clinicians access to remote monitoring and better engagement with patients.

Also, in the same month, Cerner made an investment in Elligo Health Research that will enable the former to ink a commercial agreement to extend the data and tools available in the Cerner Learning Health Network.

These deals are likely to have contributed to the company’s first-quarter performance.

Moreover, the company witnessed gross margin expansion in the fourth quarter driven by the improved revenue mix owing to lower outsourcing, third-party services, technology resale and reimbursed travel. Consequently, the trend is likely to have continued in the first quarter.

Here’s What the Quantitative Model Suggests

Per our proven model, a combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is the case here as you will see below.

Earnings ESP: Cerner has an Earnings ESP of +0.37%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company carries a Zacks Rank #3.

Other Stocks Worth a Look

Here are some other medical stocks worth considering as these too have the right combination of elements to post an earnings beat this quarter.

AmerisourceBergen Corporation ABC has an Earnings ESP of +0.23% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

DENTSPLY SIRONA Inc. XRAY has an Earnings ESP of +11.36% and a Zacks Rank of 2.

Zimmer Biomet Holdings, Inc. ZBH has an Earnings ESP of +1.69% and a Zacks Rank of 3.

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