Cerner Shares Jumped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of health-care IT specialist Cerner (NAS: CERN) surged 14% today after its quarterly results and guidance topped Wall Street expectations.

So what: Cerner shares have lagged a bit in recent months on concerns over slow bookings, but today's fourth-quarter beat -- adjusted EPS of $0.55 versus the consensus of $0.50 -- suggests that those fears are way overblown. In fact, bookings jumped to an all-time high of $899 million, so it's no surprise that the shares are once again flirting with their 52-week highs.

Now what: For the first quarter, management now sees adjusted EPS of $0.48-$0.50 on revenue of $565 million-$585 million, while analysts were expecting adjusted EPS of $0.49 on a top line of $565.2 million. "We expect to continue to see a strong market for health care IT solutions and services for years to come as the health care industry undergoes a transition from paper to digital records and shifts from volume-based payment programs to programs based on measurements of quality and outcomes," co-founder and CEO Neal Patterson said. With the stock still trading at a 40-plus P/E, however, I'd wait for a pullback before betting on those tailwinds.

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At the time thisarticle was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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