WebMD Plunges; Can it be Resuscitated?

[Stocks-to-Watch]

WebMD (WBMD) stock is down 27% this afternoon after the company said its CEO Wayne Gattinnela has resigned, and added that its fourth quarter earnings and revenue would likely come in in the lower half of its guidance range. WebMD also said it is no longer considering “strategic alternatives.”

The release is filled with negative revelations: expenses will be higher next year, competition is getting more fierce, and its customers are cutting back on marketing. It’s the kind of bad-news-purge that tends to send a stock plummeting.

One analyst is cautioning investors not to suddenly take an interest in the stock, given the drop.

“Despite the sell-off today, we are not changing our rating and would not chase the stock. We believe fundamentals could remain choppy for some time given the patent expiration headwinds through CY13+. While an activist like Icahn could emerge, we estimate the probability of this outcome is challenging. And, the recent unsuccessful sale process does not add confidence to the company’s options,” wrote Barclays analyst Mark May.



Original Article Source by Barrons.com