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Cerner Gains Momentum in HCIT Space Amid Tough Competition

Zacks Equity Research

On Dec 26, we issued an updated research report on Cerner Corporation CERN. The stock carries a Zacks Rank #3 (Hold).

Cerner is one of the largest pure-play healthcare information technology solutions (“HCIT”) companies and its wide footprint, large reference-able client base and composite array of solutions make it an ideal candidate for investors seeking exposure to the HCIT industry. We note that Cerner continues to benefit from the ongoing demand for its core solutions and services driven by the HITECH Act.

Furthermore, Cerner is not simply a player in the domestic HCIT market. Instead, it offers exposure to worldwide healthcare automation. Its international operations provide a more diversified revenue stream.


We believe that Cerner has solid growth opportunities in the revenue cycle management (RCM) suite of solutions.

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

Moreover, Cerner’s strong balance sheet and cash flow enable it to pursue growth opportunities including accretive acquisitions.

On the flipside, the company operates in the HCIT space, which is intensely competitive and fast evolving, subjecting it to rapid technological changes. Moreover, the winding down of the government EHR program is expected to create a significant headwind for Cerner. 

Share Price & Estimate Revision

Cerner impressed with its performance on the bourse last year, trading above the industry. A glimpse at its price movement reveals that Cerner’s shares have gained 42.6%, comparing favorably with the 34.5% rise of the industry it belongs to.

On the flip side, the estimate revision trend for the current year remains unfavorable with 12 estimates moving south over the last two months, compared with no movement in the opposite direction. The company’s current estimate slipped 1.6% in the past two months.

Stocks to Consider

A few better-ranked medical stocks are Bruker Corporation BRKR, Amedisys, Inc. AMED and Chemed Corporation CHE. Notably, Bruker, Amedisys and Chemed carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Bruker has a long-term expected earnings growth rate of 9.9%. The stock has rallied roughly 57.3% in a year.

Amedisys has a long-term expected earnings growth rate of 18.5%. The stock has skyrocketed 22.3% in a year.

Chemed has a long-term expected earnings growth rate of 10%. The stock has soared 50.5% in a year.

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Cerner Corporation (CERN) : Free Stock Analysis Report
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