Did you miss today’s move on one of Hedgeye’s strongest conviction short calls in the healthcare sector? If our analysts’ thesis continues to play out, you may still have another chance to get on board.
A month ago – almost to the day – Hedgeye Healthcare analyst Andrew Freedman and Health Policy analyst Emily Evans warned that Cerner Corp. (CERN) was leaning far too much on the expectation of getting a contract from the U.S. Department of Veterans Affairs in their guidance numbers. This expectation became a reality when CERN lowered its guidance for the rest of 2018 on last night’s earnings call due to “the delay of a large contract and less predictable end market”. Freedman has been the Bear on CERN since the summer of 2016 based on his forecast for deteriorating end-market demand and unrealistic growth expectations set by management.
“Without the V.A. I think it’s going to be pretty ugly,” Freedman says in the above clip. “It’s been bad, it’s going to continue to be bad and I think it can get even worse. It’s gravity. The tide is going out."
CERN dropped more than eight percent to start the trading day, but Freedman believes the stock is headed even lower. He says the stock could fall to $40, with risk to even further downside.
Watch the full clip above for more.
