Bullish stock to watch: Cerner Corporation (NASDAQ: CERN)

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Cerner Corporation (NASDAQ: CERN) stock rose over 6.1% on Feb 5th, 2020 (as of 10:30 am GMT-5; Source: Google finance) after the company has beaten the earnings estimate for the fourth quarter of FY 19. The bookings were $1.665 billion in Q4 and ended the quarter with a revenue backlog of $13.71 billion, which is decline of 10% from a year ago, mainly due to the termination of a RevWorks agreement. The company has ended Q4 with $542 million of cash and short-term investments, which has decreased from $633 million last quarter with the free cash flow being offset by the $75 million acquisition of AbleVets and $300 million of share repurchases in Q4.

CERN in the fourth quarter of FY 19 has reported the adjusted earnings per share of 75 cents, beating the analysts’ estimates for the adjusted earnings per share of 74 cents, according to figures compiled by Thomson Reuters. The company had reported the adjusted revenue growth of 5.1 percent to $1.44 billion in the fourth quarter of FY 19. Licensed software revenue in Q4 increased 5% over Q4 of ’18 million to $174 million. Technology resale of $60 million in Q4 rose 31% compared to a weak Q4 of 2018. Subscriptions revenue rose 7% in Q4 to $93 million. Professional services revenue rose 9% in Q4 to $509 million, mainly due to strong growth in implementation services and partially offset by approximately $23 million less revenue due to termination of the RevWorks agreement. Managed services was up 3% in Q4 to $309 million while the support and maintenance was down 1% to $274 million for the quarter.

The company posted the gross margin for Q4 of 80.8%, down from 81% in Q3 of ’19 and 82.6% year-over-year due to higher third-party services largely related to the federal business and a lower margin mix within technology resale. The adjusted operating margin for the quarter was 20.3%, up from 18.7% in Q4 of ’18 and 18.1% last quarter.

For the first quarter of fiscal 2020, the company expects revenue to be in the range of $1.415 billion and $1.465 billion. First quarter 2020 Adjusted Diluted Earnings Per Share is expected to be in the range of $0.69 and $0.71. First quarter 2020 new business bookings is expected to be in the range of $1.100 billion and $1.300 billion.

For the fiscal 2020, the company expects revenue to be in the range of $5.725 billion and $5.975 billion. Full year 2020 Adjusted Diluted Earnings Per Share is expected to be in the range of $3.09 and $3.19.

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