Friday, October 26, 2012

Cerner Beats Expectations, Up 11%

Cerner Corporation released earnings Thursday with their fifth consecutive quarter of double-digit growth. Their revenue was $676.5 million which was an 18.5% increase from Q3 2011, and beat analyst estimates of $638.1 million. Cerner reported adjusted net income of 60 cents per share which beat analyst estimates of 55 cents per share. Cerner also was able to add several new clients, both in the United States and Globally. One of Cerner’s new initiatives that our thesis was based on was their cloud-based solutions, and they made great progress rolling them out. Cerner has not changed their outlook for the fourth quarter and remains at 61 cents per share, which leaves full year EPS estimates at $2.22 per share. Cerner released after the bell and the stock rallied 10% following the announcement. At the bell the next morning Cerner opened up as high as 15% before retracting to gains of about 11%. This earnings release confirms our thesis and we will continue to hold Cerner Corporation with a price target of $95.

Ryan Ranado, Technology Sector Head

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