Keen Interest in Cerner (CERN) *Obama Stock*

• Cerner’s shares currently trade at a 23 times P/E multiple based on a $2.41 EPS. 
• This is considered an Obama stock because of the American Recovery and Reinvestment Act of 2009 which includes a $36 billion legislation incentivizing health services to incorporate more IT into their database management system and penalize those that don’t make the effort. 
• In turn, this goal will make the health-care system more efficient both time wise and costs wise as well as making it more safer.
• Healthcare spending is expected to top $2.5 trillion this year, or 17.6% of GDP.

"if most hospitals and doctors' offices adopted [health-care IT], the potential savings for both in-patient and out-patient care could average over $77 billion per year, largely due to shorter hospital stays.” – 2005 Rand Corp. Study

What is an electronics record for healthcare:

• It is a digital store of clinical data, documenting virtually every step of a patient’s hospital stay.
• These include test results, vital signs and radiology images.
• The computerized order entry lets a doctor or nurse request a test or prescription electronically.

AIM: Improving coordination among the parties that deliver healthcare, while minimizing mistakes.

“Hospitals are slashing costs, but the coming switch to electronic records should boost Cerner shares.  One analyst sees 40% upside over 20 months.” – Barron’s

Technicals

Technicals look pretty interesting It is currently holding up well at the $53.29 support level but based on the current levels of the MACD and stochastic it looks like it still has some more room on the downside especially with the newly renewed pessimism that the market has towards the future of the economy again.  This stock has certainly hit bottom around the $32.00 evident from the multiple tests between October 10th, 2008 to November 21, 2008.  On top of that the 150 and 200 day moving average has also flattened out with the 10, 20, 50 and 100 DMA crossing the 150 and 200.   

Will look at entering around $50.30 in a couple of days.  From there, short term target price will be $65.00. 

Source: Barron's