Aggressive · Stocks to Consider and Updates

Cerner Results Disappoint; Lowers Guidance

Shares of health care information technology provider Cerner Corp. (NASDAQ: CERN – $53.42) are falling about 8% in today’s trading following less-than-expected first quarter results. Revenue for the period was $1.293 billion, an increase of 3% compared to $1.260 billion in the first quarter of 2017, but below the $1.3 billion Wall Street was looking for. Adjusted earnings were $193.9 million, compared to $197.8 million last year and equal to earnings per share of $0.58 vs. $0.59 and in line with analysts’ estimates. Bookings in the period were $1.398 billion, an increase of 12% compared to the first quarter of 2017. Looking ahead, Cerner guided:

  • Second quarter 2018 revenue between $1.310 billion and $1.360 billion.
  • Full year 2018 revenue between $5.325 billion and $5.450 billion, down from a range of $5.450 billion to $5.650 billion.
  • Second quarter 2018 adjusted earnings per Share between $0.59 and $0.61. 
  • Full year 2018 adjusted earnings between $2.45 and $2.55 per share, down from a range of $2.57 to $2.73.
  • Second quarter 2018 new business bookings between $1.350 billion and $1.550 billion.

       Support for this quality stock softened in the wake of the earnings report. Nonetheless, I like Cerner’s decision to invest the benefit from the new lower corporate tax rate in its operations, supporting the favorable long-term prospects that I currently envision. Patient investors, willing to accept some risk, may find interest here at current levels.

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