It Could Be Blessing In Disguise For Cerner Corporation (CERN)

Vice Chairman Illig Clifford W sold 435,000 shares in Cerner Corporation (NASDAQ:CERN) for $11,269,936 in transaction occurred on 2018/12/03. After making this transaction, the Vice Chairman owns a direct stake of 25,208,250 shares, worth $618,000,000, as per the last closing price. On 2018/11/19 Illig Clifford W, Vice Chairman at CERN, dumped 5,000 shares at an average price of $57.19 per share. The selling total is valued at $663,000,000.

Separately, it had been reported that some other CERN insiders also took part of the insider trading activity. Vice Chairman, Illig Clifford W had divested 250,000 shares for $12,079,272 through a trade on 2018/11/02. Following this activity, the insider holds 14,382,500 shares worth $663,000,000 as of recent close. Wall Street’s most bullish Cerner Corporation (NASDAQ:CERN) analysts are predicting the share price to blow past $76 per share during the next 12 months. The current median share price forecast by them is $67, suggesting that the stock could increase 22.11% in that time frame. The average price target of $65.95 calls for a nearly 20.19% increase in the stock price.

Cerner Corporation (CERN) trading activity significantly improved as the volume at ready counter increased to 3,063,605 shares versus 1,722,200 in average daily trading volume over the past 20 days. So far this year, the volume has averaged about 2,192,941 shares. The share price dropped -2.23% in recent trade and currently has a stock-market value of $17.9B. The shares finished at $54.87, after trading as low as $54.17 earlier in the session. It hit an intraday high Thursday at $55.49. The stock is now 7.78% above against its bear-market low of $50.91 on October 26, 2018. It has retreated -33.83% since it’s 52-week high of $73.43 reached in January. Now the market price is down -21.71% on the year and down -18.58% YTD.

CERN’s 50 day simple moving average (SMA 50) price is $59.94 and its 200-day simple moving average (SMA 200) price is $61.03. The company’s stock currently has a total float of 314.52M shares. Its weekly volatility is hovering around 2.56% and felt 2.26% volatility in price over a month. On the upside, the share price will test short term resistance at around $55.52. On a downside, the stock is likely to find some support, which begins at $54.2. The failure to get near-term support could push it to $53.52.

It had seen a positive analyst call from Leerink Partners, which upgraded the stock from Mkt Perform to Outperform on October 29. Analysts at Barclays, maintained the company shares at Equal Weight on October 26 but switched target price from $70 to $67. The stock lost favor of RBC Capital Mkts analysts who expressed their lack of confidence in it using a downgrade from Outperform to Sector Perform on October 26.

When looking at valuations, Cerner Corporation (CERN) has a cheap P/E of 26.69x as compared to industry average of 52.98x. Moreover, it trades for 20.43 times the next 12 months of expected earnings. Also, it is trading at rather expensive levels at just over 3.57x price/book and 3.37x price/sales. Compared to others, Cerner Corporation is in a different league with regards to profitability, having net margins of 15.7%. To put some perspective around this, the industry’s average net margin is -14.2%. CERN’s ROE is 17%, which is also considerably better than the industry’s ROE of 9.79%. It’s also very liquid in the near term, with a current ratio of 2.6. The stock has a debt/capital of 0.09.

Shares of Cerner Corporation (CERN) have dropped -9.9% since the company’s last earnings report. Over the past 12 fiscal quarters, Cerner Corporation (NASDAQ:CERN) has topped consensus earnings estimates in 3 quarters (25%), missed earnings in 6 quarters (50%), whereas at 3 occasion EPS met analyst expectations. CERN last reported earnings on October 25, 2018 when it released Sep-18 results that receded expectations. The company raked in $0.63 per share, 530% change on the same period last year. That was worse than consensus for $0.63. Revenue for the recent quarter stood at $1.34 billion, up 5% on last year and below the $1.36 billion predicted by analysts. For this quarter, Wall Street analysts forecast revenue in a range of $1.38 billion to $1.41 billion, which should be compared with $1.45 billion generated last year. EPS is seen in a range of $0.62 to $0.65, against the $0.67 reported a year ago.