Will This Upgrade Help Cerner (CERN) Stock Today?

Story updated at 10 a.m. to reflect market activity.

NEW YORK (TheStreet) -- Cerner (CERN) was upgraded to "buy" from "hold" by UBS (UBS) Wednesday.

Cener gained 1.6% to $50.82 in morning trading.

The firm set a price target of $60 for the stock. The upgrade is due to a valuation call according to UBS analysts.

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Separately, TheStreet Ratings team rates CERNER CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate CERNER CORP (CERN) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share, increase in net income and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • CERN's revenue growth has slightly outpaced the industry average of 5.6%. Since the same quarter one year prior, revenues rose by 15.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • CERN's debt-to-equity ratio is very low at 0.05 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 2.61, which clearly demonstrates the ability to cover short-term cash needs.
  • CERNER CORP has improved earnings per share by 9.7% in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. We anticipate these figures will begin to experience more growth in the coming year. During the past fiscal year, CERNER CORP's EPS of $1.13 remained unchanged from the prior years' EPS of $1.13. This year, the market expects an improvement in earnings ($1.65 versus $1.13).
  • The net income growth from the same quarter one year ago has exceeded that of the Health Care Technology industry average, but is less than that of the S&P 500. The net income increased by 8.6% when compared to the same quarter one year prior, going from $110.04 million to $119.53 million.
  • The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • You can view the full analysis from the report here: CERN Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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