Cerner Corp (NASDAQ:CERN)

CAPS Rating: 4 out of 5

A supplier of healthcare information technology, healthcare devices & related services. It offers a range of services including implementation & training, remote hosting, support & maintenance, healthcare data analysis & clinical process optimization.


Player Avatar NetscribeSoftwre (98.84) Submitted: 1/19/2007 7:56:26 AM : Outperform Start Price: $11.60 CERN Score: +401.01

Cerner Corporation formed in 1979, is a major worldwide provider of Information Technology (IT) based solutions and devices to the healthcare industry. The company supports healthcare providers with secure access to clinical, administrative, and financial data in real time, with its Cerner Millennium architecture. Cerner revenues are segregated into System sales, Support maintenance and services and Reimbursed travel. System sales are revenues from the sale of software and hardware and sublicensed software, while Support maintenance and services involve professional and management services, which generates the major chunk of around 60% of the over all revenues.

The healthcare care sector is showing a changing trend from its old fashioned framework, to the new found reliance on IT. Initiatives in United States and across the world for the benefits of changing paper records to digital ones have made a positive impact on Health Care IT, with hospitals becoming center of the digital adoption. However just 14 percent of all U.S. physicians have automated their medical records, thus leaving a huge room for future growth. The US health care industry is expected to $34.7 billion by 2011, from $16.38 billion that it notched up in 2005.

Cerner is showing a healthy performance, with its increasing revenue and higher margins generated from the system sales. The stock recently has also witnessed a rise of around 5% on speculation of it being acquired by General Electric. The company’s future outlook appears promising, with a strong North American hospital pipeline and likelihood of winning large contracts due to strong hold in the market. Cerner also has a very healthy order book, and high book-to-bill ratio. Further, the likely hood of the takeover could generate much higher returns for share holder. However, in a no acquisition scenario, company’s strong fundamentals, huge cash flow as well as positive industry outlook, are enough of signs, to add Cerner in the portfolio.

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Member Avatar extremeinvesting (98.31) Submitted: 2/4/2007 12:48:39 AM
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Amen, amen, amen, which is why CERN is an "extreme performance stock" and for the reasons you state is back up into more respectable territory with the great pop recently, breaking into the $50 range. As you stated, the continual emphasis on having secure medical records available electronically, will only send this stock on a one way ticket to the moon.

Member Avatar NetscribeSoftwre (98.84) Submitted: 5/16/2007 8:18:38 AM
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Cerner continues the strong growth in the first quarter fiscal 2007. For the three months ended 31 March 2007, revenues surged 14% to $365.9 million, as a result of improved inflows from system sales, while higher income from support, maintenance & services also aided the top-line growth. The net income tally also observed a 37% climb, the rise can primarily be attributed to strong growth in operating and net margins that laid a positive impact on the bottom line, along with higher net interest income received during the period.

The company continues to benefit from rising demand in health care industry for IT enabled technology aiding the hospitals to provide a better and faster service at reduced costs. The market size available for the company is huge and growing, estimated to be currently around $400 billion. Considering Cerner being such a key player in the industry, it should surely benefit from tapping the massive market.

Going ahead, the company expects to continue its sturdy run-up, with top-line estimated to be in the range of the range of $370 - $380 million for the coming second quarter, much higher than about $330 million generated in previous year second quarter. The 35% rise in new business bookings and about $2.28 billion of contract backlog and $490 million of support and maintenance backlog currently existing, is the key reasons for such an optimistic outlook. Moreover, company’s foray into international market of UK and France puts Cerner in the good state, as it can further aid the company to boost its top-line. Furthermore considering, the growing margins, improved balance sheet and company’s solid fundamentals, Cerner looks like a smooth story in the coming year.

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