An Earnings Miss Could Make This Stock a Screaming Buy

by Sam Collins | February 5, 2013 1:10 am

Cerner Corp. (NASDAQ:CERN[1]) — This leading supplier of health care information technology (IT) is in a powerful bull channel that began in November 2010. We have recommended it several times before and had success each time: First, on Oct. 21, 2011[2], at about $66 with a target of $75; then on May 21, 2012[3], it was recommended on a pullback to $75, and ran to over $88.

The company is scheduled to report Q4 and full-year 2012 earnings after the close today. CERN has exceeded its guidance in eight of the past nine quarters. Analysts believe it will again exceed expectations, with Forbes estimating Q4 earnings will come in at $0.60, up from $0.53 a year ago. Full-year 2012 earnings are expected to be $2.24, up from $1.76 in 2011. Earnings for 2013 are forecast at $2.70.

I am actually hoping for a slight earnings miss to be reported after the close, which could cause the stock to pull back below $70, where I think it is a screaming buy. CERN could also pull back on continued selling in the broader market. My initial trading target is $86, and my longer-term objective is $100.

CERN Chart
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Trade of the Day Chart Key

  1. CERN:
  2. Oct. 21, 2011:
  3. May 21, 2012:

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