RBC: Time To Buy Cerner Corp, Stock Can Rise To $70

• Shares of Cerner Corporation CERN have declined by almost 18 percent, following the high of $75, achieved on April 10.
• RBC Capital’s David Francis has upgraded the rating on Cerner from Sector Perform to Outperform, while raising the price target from $68 to $70.
• The significant selloff in the health care segment offers a “unique opportunity to own a market leader.” Francis believes that Cerner’s stock valuation is currently at a historically attractive level.

Analyst David Francis also reported that early channel checks suggest that the company should be able to meet the P&L and bookings targets for 3Q15, while mentioning that “bookings in the quarter will be aided by (i) the signed DoD deal, and (ii) what we estimate were approximately $150 million of “slipped” bookings from 2Q/15 into the current quarter.”

The channel checks also suggest that there has been an acceleration in RFP activity in the part of the business associated with Siemens AG (ADR) SIEGY.

In addition, Francis believes that the company would be able to easily achieve the earnings expectations for 3Q15 through 2016. In fact, Cerner is expected to generate earnings growth in the mid to high teens during 2016, while the 3Q15 performance is expected to be robust.