Leerink Partners Maintains Bullish View on Cerner (CERN) Despite Revenue Weakness and Disappointing Guidance
Leerink Partners analyst David Larsen maintained an Outperform rating and $80 price target on Cerner (NASDAQ: CERN) following Q3 results which showed record bookings but revenue weakness and disappointing guidance.
Larsen commented, "This afternoon CERN reported 3Q:15 results with total revenue of $1,128M (+34.2% y/y) which was below our estimate of $1,174M, consensus of $1,169M, and guidance of $1.15-$1.2B. While revenue missed our estimate, adjusted EPS were in line with consensus and bookings of $1.59B increased 44% y/y and were well ahead of our $1.4BE. Management highlighted that the bookings contribution from DoD and Health Services was not material in the quarter. Management also provided preliminary 2016 adjusted EPS guidance of $2.30-$2.40 which is below consensus, but most of the shortfall is likely due to a y/y increase in D&A. We expect shares to open down on Wednesday, but given re-set expectations and a ramp in hiring in 3Q:15 to accommodate incremental service engagements, as well as excellent bookings growth, we maintain our Outperform rating and $80 price target on the stock."
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Shares of Cerner closed at $66.09 yesterday.