Cerner could benefit longer term if iSoft stumbles. Although the CSC news probably limits further near- term U.K. opportunities, the firm believes it also simplifies succession planning in three regions should iSoft continue to miss commitments or cease to exist as a going concern. Given the NHS' demonstrated preference for smooth transitions under IT contracts, Cerner's execution capabilities in the South and London may make it the de facto white knight on as many as three regions at once should change be inevitable.
Firm reiterates Outperform rating and price target of $51, based on solid 2007 EPS growth and burgeoning HIT opportunities worldwide.
Notablecalls: This is the type of stuff that may hurt high valuation stocks like CERN. While I have no idea how much of CERN's revenues come from UK, there has been a lot of talk regarding the NHS deals over the past 6 months.