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Argus downgrades Cerner to 'hold' on 'challenging outlook'

Argus analyst Jasper Hellweg downgraded Cerner Corp. to "hold" from "buy" due to what he sees as a "challenging outlook" for the company.

Hellweg in a note to clients pointed out that the company is dealing with declining margins and has yet to finalize a major Department of Veterans Affairs contract that it hoped to sign in the fourth quarter of 2017. Those issues, as well as the fact that Cerner management sees 2018 as an "investment year," were the main reasons for the downgrade.

Cerner was first awarded a contract to build the VA's electronic health records system in early June 2017. The delay in finalizing the agreement contributed to an earnings miss in the last three months of 2017, Hellweg said.

The analyst cut his 2018 EPS estimate to $2.60 from $2.69 and introduced a 2019 EPS estimate of $2.94.