CERN: Should You Buy the Dip in Cerner?

Cerner (CERN) was trading at $83 last January. The stock dipped down to $68 in early March. Though CERN has since moved back up a bit, it is still trading well below its 52-week high of $84.20.

CERN’s dip in recent months is particularly concerning as the decline occurred amid a bull market. Even if CERN’s news stories and financial figures were somewhat disappointing during this stretch, the overarching market-wide positive sentiment buoyed other stocks with questionable merits.

Is now the time to buy CERN? Is the stock’s decline during the market’s rise a worrisome sign for CERN shareholders? Let’s find out.

CERN’s Merits

CERN’s current price is attractive, primarily because it has considerable value in the context of its earnings. The stock’s forward P/E ratio is a tempting 22.61. This figure is lower than most investors would expect because CERN qualifies as a tech stock. CERN’s business will likely hold firm for the foreseeable future, considering the fact that it provides healthcare devices and healthcare information technology.

The healthcare industry is booming now that the enormous baby boomer age cohort is entering its golden years. The increased spending on healthcare will continue long after the boomers depart this plane of existence as their children, the millennials, comprise the country’s largest age cohort. The millennials’ need for healthcare will come on the heels of their parents’ generation’s need for those services, hiking CERN’s revenue and similar companies all the more across the decades ahead.

Though CERN’s fourth-quarter earnings results were somewhat of a letdown, the company deserves credit for selling off its software products used by clients in Spain and Germany to CompuGroup for nearly a quarter-billion dollars. If all goes as planned, CERN will rake in revenue for the year ahead in the range of $5.75 billion to $6 billion.

This means sales growth for 2021 could be around 4.5% or higher. If the company had not divested certain holdings in the prior year, its sales growth would have been a mere 1%. In other words, there is plenty of reason for CERN investors to be bullish about a rebound in 2021.

3 STOCKS TO DOUBLE THIS YEAR

CERN POWR Ratings

CERN has a B grade in the POWR Ratings. The stock has an A grade in the Quality component and a B grade in the Stability component. If you are curious about how CERN grades out in the remaining POWR Rating components of Momentum, Value, and Growth, you can find out by clicking here.

Of the 78 publicly traded companies in the Medical – Services industry, CERN is ranked 5th. If you would like to find other top stocks in this industry, click here.

CERN According to the Analysts

Analysts are bullish on CERN, setting an average price target of $78.23. If the stock moves up to this level, it will have popped by 11.52%. The analysts’ high target price for CERN is $88. The analysts’ low target price for the stock is $64.

Of the 23 analysts who have issued recommendations for the stock, six consider it a Strong Buy, nine consider it a Buy, seven consider it a Hold, and none consider it a Sell.

Is Now the Time to Buy CERN?

Yes. CERN is worthy of investment at its current price. The company’s guidance for the upcoming year is quite bullish. Furthermore, CERN is a POWR Ratings success with a B overall grade and an A Quality component grade and a B grade in the Stability component.

Want More Great Investing Ideas?

11 Top Stocks for March 11

9 “MUST OWN” Growth Stocks for 2021

How to Ride the 2021 Stock Market Bubble

5 WINNING Stocks Chart Patterns

CERN shares were trading at $72.04 per share on Wednesday morning, down $0.16 (-0.22%). Year-to-date, CERN has declined -8.21%, versus a 5.34% rise in the benchmark S&P 500 index during the same period.

About the Author: Patrick Ryan

Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...