Upgrade Sparks Cerner Stock Comeback

Options volume popped on CERN after last week's earnings reaction

The shares of Cerner Corporation (NASDAQ:CERN) are up 2% ahead of the bell, after Leerink upgraded the health IT services provider to "outperform" from "market perform." The analyst in coverage waxed optimistically over the company's presence in international markets, and said the small hospital market could be a growth opportunity.

On Friday, Cerner stock gapped to a 22-month low after the company reported a third-quarter revenue miss and weak current-quarter guidance. The 10.9% one-day drop was the stock's worst since 2003, and brought its year-to-date deficit to nearly 18%. As such, CERN's 14-day Relative Strength Index (RSI) closed Friday at 23, firmly in oversold territory, suggesting a short-term bounce today may be in the cards.

Options traders on Friday targeted a big rebound for CERN stock. Nearly 2,050 calls and 550 puts changed hands, more than three times what's typically seen in an average trading day. Most active were the December 55 and 67.50 calls, with buy-to-open activity detected at each.

However, sentiment in the analyst community is split, with 10 of the 22 brokerages covering the equity rating it a "hold" or "strong sell." Meanwhile, CERN's average 12-month price target of $66.40 is an almost 20% premium to Friday's closing perch of $55.55.