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Will Cerner be bought over by US tech giants?

Healthcare tech play Cerner’s share price had ticked higher earlier following unverified rumours that Google, Oracle, Microsoft or Salesforce might be eyeing an acquisition.

  • Cerner Corp (Nasdaq: CERN) share price dips to US$78.29 per share
  • An unidentified company is said to be mulling a takeover of Cerner
  • Industry watchers believe Google or Microsoft could be among the potential buyers
  • Cerner, which is looking for a new CEO, is positioned for recovery, analysts say
  • Buy and sell Cerner stocks with an IG account

Cerner stock price loses momentum

Shares of Cerner, which supplies healthcare information-technology solutions and tech-enabled services, fell 0.9% to close at US$78.29 on Thursday (27 May 2021).

The stock earlier climbed 1.5% on Tuesday and another 1.2% on Wednesday, following market speculation that it could be a potential takeover target.

Meanwhile, the Missouri-based group is still searching for a chief executive officer to replace Brent Shafer.

As of Thursday, out of 22 research teams, 12 recommended ‘buy’ on CERN shares, eight said to ‘hold’, while two gave ‘sell’ calls. Their average 12-month target price stood at US$81.43, according to Bloomberg data.

Are cloud behemoths looking to buy Cerner?

Cerner’s products include electronic health record (EHR) software and analytics. Its intelligent solutions and tech-enabled services support the clinical, financial, and operational needs of healthcare organisations.

Word on the grapevine is that an unidentified company may be seeking to acquire the healthcare IT provider, according to a Betaville Intelligence report.

Potential buyers could include software behemoth Microsoft Corporation (Nasdaq: MSFT), computer tech giant Oracle Corporation (NYSE: ORCL) and Alphabet Inc’s (Nasdaq: GOOGL) conglomerate Google, sources told Betaville.

Betaville emphasised that the market gossip has not been verified. Cerner later responded that it does not comment on speculation or rumours.

Salesforce.com, Inc (Nasdaq: CRM) might be another big-cloud provider that could potentially be interested in Cerner, Bob Evans, a former Oracle chief communications officer, wrote on his website Cloud Wars.

Evans commented that Cerner is a leader in electronic health records. ‘If data is the new currency, it sounds like in the healthcare field, Cerner is sitting on quite the stash,’ he said.

What is the outlook on Cerner?

Recent bullish ratings came from Argus Research, which recommended ‘buy’, and Piper Sandler & Co, which issued an ‘overweight’ call; both analysts targeted US$85 per CERN share.

Bloomberg Intelligence (BI) analysts highlighted that Cerner’s healthcare-sector customers are at the forefront of the Covid-19 battle. The company’s customer engagement ‘appears to be back on track after some early pandemic delays’, they noted.

BI likes Cerner’s visibility on contracts and its potential to ‘execute on long-term cost optimisation and capital deployment efforts as the environment normalises’.

The company is positioned for a recovery, especially as the coronavirus pandemic will accelerate technology change in healthcare, BI analysts added.

For the second quarter and third quarter of 2021, analysts are expecting revenue to come in at US$1.44 billion and US$1.48 billion respectively, according to estimates compiled by Bloomberg.

Adjusted earnings per share could amount to US$0.76 for 2Q 2021 and improve to US$0.814 for 3Q 2021, research teams forecast.

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The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.

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