"We will be looking for better long ideas on the next market pullback," writes Hedgeye CEO Keith McCullough. We're removing long calls on the U.S. Dollar (UUP) and Red Robin (RRGB) from Investing Ideas.
"Part of being prudent, from a short selling perspective, is understanding the macro market setup," McCullough writes. "You can have the best "bottom-up" analysis of a company in the world. Unless you have a company specific immediate-term catalyst, macro market timing matters, big time. After a massive ramp for Healthcare stocks this week, we're presented with much better entry points for our Best SELL Ideas in the space. One of those ideas is Cerner (CERN)."
Hedgeye Healthcare Sector Head Tom Tobin and Analyst Andrew Freedman held a conference call on the company this week with the following summary:
"We remain convinced Cerner will not be able to grow new client bookings (~30% of total bookings) over a multi-year duration due to a saturated EHR market with limited replacement opportunity. Cerner's inability to grow new client bookings has materially negative implications for their licensed software and services model where 80% of same contract revenue can disappear after year 3 of an installation and the associated capital payments. With new client bookings down in 2016 for the first time in a decade and revenue from strong 2015 bookings rolling off, we expect Cerner's revenue trajectory to face mounting downward pressure from 2018-2020."
