With the market looking decidedly overbought, the question for investors is which way makes sense to rotate to. As we have mentioned in the past, while it sounds good, going to cash for most investors is difficult due to tax implications and commissions. One good idea is to rotate to stocks that may have lagged but still have solid upside potential.
A new Jefferies report focuses in on some growth companies that not only have solid upside potential, but also have catalysts that could help shape the upside possibilities. While not suitable for more conservative accounts, they could prove to be solid move for aggressive portfolios. All are rated Buy at Jefferies.
This is a solid health care company that has good upside potential, and Jefferies thinks the growth potential is not appreciated. Cerner Corp. (NASDAQ: CERN) solutions assist clinicians in making care decisions and enable organizations to manage the health of populations. The company also offers an integrated clinical and financial system to help health care organizations manage revenue, as well as a wide range of services to support clients’ clinical, financial and operational needs.
Jefferies surveyed hospitals late last year and found that only about 25% have replaced their electronic health record (EHR) systems. An EHR is a digital version of a patient’s paper chart, and they are real-time, patient-centered records that make information available instantly and securely to authorized users. The analysts feel that quality vendors like Cerner will continue to take share in these replacements.
Jefferies also cites the company’s PopHealth platform, which currently has 80 clients, with a potential to ramp up to as many as 400, which represents 1,100 hospitals. The analysts feel there could be a total revenue potential as high as $480 million if the platform is fully implemented.
The Jefferies price target for the stock is $68. The Thomson/First Call consensus estimate is $64.05. The stock closed Monday at $55.72.