3 Key Points From Stifel's Cerner Initiation
Stifel issued a report initiating coverage on Cerner Corporation (NASDAQ: CERN). Stifel rates Cerner as a Hold while a price target is unavailable.
Analyst Steven Rubis 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 its 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.
Shares of Cerner recently traded at $73.25, down 0.2 percent.
Latest Ratings for CERN
|Dec 2016||Leerink Swann||Downgrades||Outperform||Market Perform|
|Nov 2016||Bank of America||Downgrades||Neutral||Underperform|
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