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Cerner Corporation’s (NASDAQ: CERN) long-term growth is likely to be slightly lower than was earlier anticipated, and there is lack of a “possible novel catalyst” to drive share price appreciation, according to BofA Securities.
The Cerner Analyst: Michael Cherny downgraded Cerner from Buy to Underperform and lowered the price target from $82 to $76.
The Cerner Thesis: The company is still among the market leaders across health IT and electronic health records, Cherny said in a Tuesday downgrade note.
Cerner could sustain growth and leverage its installed base to move into more strategic growth areas “over a multiyear period,” the analyst said.
Additional contributions from the rollout of the company's Veterans Affairs contract should also support double-digit growth, he said.
These catalysts are already well-understood, and the next opportunity for upside is unclear “given the maturity of the traditional core business and the longer-dated potential contribution from the newer growth opportunities,” Cherny said.
“Additionally, we see CERN’s valuation as not necessarily stretched but also not leaving much room for upside vs. its multi-year average. We do not foresee meaningful stock downside from here but also do not have enough upside to warrant a more constructive stance.”
CERN Price Action: Shares of Cerner were down by 0.94% at $79.46 at last check.
Cerner headquarters. Photo by Americasroof via Wikimedia.
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