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

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Cerner Corporation is well poised for growth on the back of big data-based electronic health records (EHR) system and strategic deals. However, stiff competition remains a concern.

Shares of Cerner have gained 6.2% in a year’s time compared with the industry’s growth of 30.4%. Meanwhile, the S&P 500 Index has rallied 17.7% in the same time frame.

The company, with a market capitalization of $23.91 billion, offers healthcare information technology (HCIT) solutions worldwide. It anticipates earnings to improve 11.9% over the next five years. Moreover, the company has a trailing four-quarter earnings surprise of 3%, on average.

Let’s take a closer look at the factors that substantiate the company’s Zacks Rank #3 (Hold).

What’s Deterring the Stock?

Stiff competition in the Healthcare Information Technology (HCIT) market remains a headwind. The intensity of competition might weigh on both pricing and margins.

What’s Driving Growth?

Cerner has been benefiting from the prospects of the EHR services in the U.S. MedTech space. Notably, Cerner's HealtheIntent is a big data platform, which provides it with significant exposure to AI trends in the medical world. Per management, the company’s prospects of expanding presence of EHR-agnostic CareAware and HealtheIntent solutions beyond EHR base are substantial.



The company has strengthened presence in the HCIT space through both organic and inorganic means. Further, it plans on collaborating with leading companies and academic institutions to provide a broader portfolio of EHR solutions.

In December, the company announced that it is leveraging on its deal with Xealth to provide 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. This is likely to strengthen Cerner’s presence further in the healthcare information technology (HCIT) space.

In September 2020, Cerner 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 the same month, the company 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 HCIT space but also expand its presence geographically.

Which Way Are Estimates Headed?

For 2021, the Zacks Consensus Estimate for revenues is pegged at $5.69 billion, indicating an improvement of 3.4% from the previous year. The same for earnings stands at $3.21 per share, suggesting growth of 12.9% from the year-ago reported figure.

Stocks to Consider

Some better-ranked stocks from the broader medical space are Merit Medical Systems, Inc. (MMSI - Free Report) , Patterson Companies, Inc. (PDCO - Free Report) and McKesson Corporation (MCK - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Merit Medical has a projected long-term earnings growth rate of 12.6%.

Patterson Companies has an estimated long-term earnings growth rate of 9.6%.

McKesson has a projected long-term earnings growth rate of 6.6%.

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