Morningstar Analyst Vishnu Lekraj says current challenges within the health care market actually create an opportunity for companies like Cerner Corporation (CERN) that help health care service providers make their operations as efficient as possible. Lekraj says companies like Cerner ultimately help providers capture savings.
“So for instance, electronic records management makes a lot of provider networks more efficient, which theoretically will cut down on administrative and medical costs,” Lekraj says. “In addition to that, Cerner provides a lot of other patient population type of services, integrate those services into a provider’s network more easily, and therefore the provider can work with the insurance company more easily to help save on treatment cost and things of that nature.”
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Lekraj says services like the ones Cerner provides are going to be in great demand, and he expects that demand to grow over the next several decades. As such, Lekraj says Cerner is a smart longer-term investment.
“If someone is looking to make an investment within this field or to take advantage of a lot of these tailwinds, Cerner is not a bad company to own over the longer term, and it’s a highly positive story when we couple this with what we call an economic moat at Morningstar, or in other words, Cerner’s competitive advantages,” Lekraj says. “And I currently rate Cerner with a wide moat, meaning that over the longer term it should produce excellent economic profitability for shareholders.”
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