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Here's Why You Should Hold on to Cerner (CERN) Stock for Now

A strong outlook for 2018 and a slew of developments are working in favor of Cerner Corporation CERN at present. However, an intensely competitive industry is concerning.

Over the past year, shares of Cerner have plunged 26.5% compared with the industry's 17.7% decline. The current level also compares unfavorably with the S&P 500 index’s 7.6% decline.

The stock carries a Zacks Rank #3 (Hold).

What’s Deterring the Stock?

Cerner faces cutthroat competition from Healthcare IT (“HCIT”) bigwigs like athenahealth ATHN and Allscripts Healthcare Solutions, which might affect both pricing and margins.

Why Should You Retain Cerner?

Guidance Solid

For the fourth quarter of 2018, Cerner expects revenues between $1.37 billion and $1.42 billion. The midpoint of this range reflects year-over-year growth of 6%. Adjusted earnings per share are projected in the band of 62-64 cents. The midpoint of this range is 9% higher than the year-ago quarter.

On a full-year basis, revenues are expected at $5.4 billion, which reflects 5% growth over 2017 and is above the midpoint of Cerner’s previously-issued guidance. Adjusted earnings per share are expected at $2.46, which is above the low end of Cerner’s earlier-provided guidance.

Cerner Rides on a Slew of Developments

The Missouri-based HCIT bigwig has lately seen a series of developments.

Cerner lately collaborated with Mckesson's MCK wholly owned subsidiary — CoverMyMeds to integrate patient-specific information into the EHR for providers to review prescription pricing information with their patients.

Last year, Signature Performance joined Cerner to help make seamless care available to the veterans in the United States.

Additionally, Cerner, along with health technology company Carevive, has announced the first deployment of their integrated cancer care management software. Notably, Carevive's patient care planning software has been integrated into Cerner Oncology to interact with the patient's EHR.

Cerner Corporation Price and Consensus

 

Cerner Corporation Price and Consensus | Cerner Corporation Quote

 

Which Way Are Estimates Treading?

For the fourth quarter, the Zacks Consensus Estimate for earnings is pegged at 63 cents, reflecting a year-over-year increase of 8.6%. The same for revenues is pegged at $1.39 billion, showing an increase of 6.1% from the previous year.

For 2018, the Zacks Consensus Estimate for revenues is pinned at $5.39 billion. The same for earnings stands at $2.46, indicating growth of 3.4% from the previous year.

Key Pick

A better-ranked stock in the broader medical space is Veeva Systems Inc VEEV.

Veeva Systems’ long-term earnings growth rate is projected at 19.5%. The stock flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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Veeva Systems Inc. (VEEV): Free Stock Analysis Report
 
athenahealth, Inc. (ATHN): Free Stock Analysis Report
 
Cerner Corporation (CERN): Free Stock Analysis Report
 
McKesson Corporation (MCK): Free Stock Analysis Report
 
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