WebMD parent company WebMD Health Corp has revised its outlook due to a lack of healthcare advertisers spending money with the firm.
WebMD said it now expects net income for 2008 to be between $29.5 million and $37.5 million, down from prior estimates for profit of $36.5 million to $46 million.
Citigroup analyst Mark Mahaney lowered his outlook on WebMD for 2008. He reiterated a “hold” rating on the stock.
Goldman Sachs analyst Jennifer Watson said the degree of the company’s outlook revision and its explanation that drugmakers are hesitant to commit to advertising spend six to 12 months in advance, were quite surprising.
“The biggest question is whether the slower trends are WebMD-specific or industry-wide,” Watson wrote in a note to clients. “Specifically, we wonder if advertisers are testing lower-cost options, including emerging ad networks that deliver impressions across smaller consumer health and beauty sites.”
Stifel Nicolaus & Co.’s George Askew said in an Associated Press report the second revision is “incredibly frustrating” given that WebMD’s pharma and healthcare-related advertising customers are generally believed to be less economically sensitive than the overall advertising community.
From the June 01, 2008 Issue of MM+M - Medical Marketing and Media