Cerner Corporation Initiated Hold at Stifel

Stifel issued a report initiating coverage on Cerner Corporation

. Currently Stifel rates Cerner as a Hold while a price target is unavailable. Steven Rubis, an analyst at Stifel, wrote, "We believe consensus presupposes Cerner represents one of the best positioned HCIT companies set to benefit from increased HCIT spending and increasing wallet share among clients. We take a contrarian approach as we believe the shift to performance-based technology investment and shift to performance-based reimbursement will require evolving value propositions to maintain market leadership." Stifel cites three key points of their valuation basis: 1. Shift to Performance-Driven technology investment: Outside pressures may provide downward pressure on HCIT spending. Stifel believes that the performance-driven value proposition of managed IT will cause clients to question the value proposition of the core EHR business. 2. Siemens Health Services Acquisition: Stifel believes that rolling up competing platforms represents a departure from Cerner's historical trend. However the deal was important for Cerner to drive 2020 revenues expectations. 3. Efficiency and Research and Development Spending: Cerner invested over more than $4 billion cumulatively since 2000 in R&D. Stifel believes that Cerner's R&D spending seems inefficient when viewed through the lens of cloud-based platforms, KLAS rankings, and digital healthcare funding. Currently Cerner Corporation is trading at $73.12, down 0.38 percent.