What's In The Cards For Cerner (CERN) This Earnings Season?

North Kansas City, MO-based Cerner Corporation (NASDAQ:CERN) , a leading global provider of healthcare information technology solutions (HCIT), is set to report first-quarter 2017 results, after the closing bell on Apr 27.

Last quarter, the company reported adjusted earnings of 57 cents, in line with the Zacks Consensus Estimate. However, the company’s earnings did not top the Zacks Consensus Estimate in any of the last four quarters, resulting in an average miss of 0.45%. Delving deeper into the fundamentals of the stock, let’s see how things are shaping up prior to this release.

Factors at Play

We believe that Cerner’s strong product portfolio will help it to boost its customer base. The frequent contract wins reflect growing traction. Furthermore, the company has strong growth opportunities in the revenue cycle management (RCM) and ambulatory space.

The company forecasts revenues between $1.200 billion and $1.275 billion for first-quarter 2017. Booking revenues are projected in the band of $1.125 billion and $1.275 billion. Adjusted earnings are expected at 57 cents to 59 cents per share.

However, the HCIT market is highly competitive and Cerner, a major player in this space, has been facing cut-throat competition from other reputed players. This has impacted the company’s pricing and margins to a great extent. Stringent hospital budgets exert further pressure on pricing. We do not expect the first quarter to have been an exception.

Also, overall activities of Cerner during the first quarter were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for the quarter to be reported fell 2 cents to 53 cents per share in the last 90 days.

Cerner Corporation Price and EPS Surprise

Earnings Whispers

Our quantitative model doesn’t point to an earnings beat for Cerner this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: The Earnings ESP for Cerner is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 53 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Cerner currently carries a Zacks Rank #3. Though a favorable Zacks Rank increases the predictive power of ESP, the company’s 0.00% ESP makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are three companies you may want to consider as our proven model shows that they have the right combination of elements to post an earnings beat this quarter:

Proteostasis Therapeutics (NASDAQ:PTI) has an Earnings ESP of +5.17% and a Zacks Rank #1. You can see the complete list of today’s Zacks Rank #1 stocks here.

Anthem, Inc. (NYSE:ANTM) has an Earnings ESP of +7.79% and a Zacks Rank #2.

Preferred Bank (NASDAQ:PFBC) has an Earnings ESP of +1.33% and a Zacks Rank #2.

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