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Punished by investors a week ago for guiding Q1 a hair below Wall Street expectations, Cerner was punished again Tuesday by a Goldman Sachs downgrade. Cerner ( CERN ) stock was down more than 3%, near 50, in late-afternoon trading in the stock market today . Last week, shares touched a 21-month low of 49.89. Goldman Sachs analyst Robert Jones downgraded Cerner from buy to neutral and lowered its price target from 62 to 54, with a 3% upside potential. Cerner’s Q4 earnings beat, but its Q1 adjusted EPS guidance of 52 to 54 cents, on sales of $1.15 billion to $1.2 billion, slightly lagged at the midpoint the 54 cents and $1.178 billion consensus estimate of analysts polled by Thomson Reuters. The midpoint of guidance would mark a 22% year-over-year gain in EPS and a 27% gain in sales. Cerner also said Q1 new-business bookings would be flat with Q1 2015, at $1.15 billion to $1.25 billion. Last year’s Q1 bookings rose 32% from Q1 2014. Cerner’s is the largest pure-play health care information technology company in the U.S., competing with the IBM ‘s ( IBM ) Watson Health subsidiary, health care IT software from Oracle ( ORCL ) and others. “As the model increasingly transitions from faster-converting software to slower-converting services, we think it will take strong execution for CERN to maintain 10%/15% revenue/EPS growth,” Jones wrote. “With this backdrop, we think it is more appropriate to benchmark CERN to more mature software and IT outsourcing comps, which trade at 19 (times the next 12-month price/earnings).” Jones said he similarly analyzed Cerner’s smaller rival Allscripts Healthcare Solutions ( MDRX ) and decided to maintain his neutral rating and 13 price target, with 7% upside potential. Allscripts was up a fraction, above 12, Tuesday afternoon. Shares of both IBM and Oracle were down more than 1% Tuesday afternoon. Scalper1 News
Scalper1 News