Time to Buy WebMD

Apr. 7.08 | About: WebMD Health (WBMD)

WebMD (NASDAQ:WBMD), is ranked by Times as one of the 25 sites we can’t live without, rated by Forbes as the best of online health information portal, and recognized by Trustee as one of the top 20 most trusted companies on the web. The company announced its Q4 financials as well as its merger with HLTH Corporation in February.

Q4 revenues of $96.6 million were 22% higher than previous year revenue and a tad lower than market expectations of $97.1 million. Its EPS recorded a substantial 126% increase to $0.34 from $0.15 earned the previous year. Its EPS also beat market expectations of $0.28.

Segment-wise, 73% of its revenue came from Advertising and sponsorship. Private portal licensing brought in 22%, and the 5% balance was earned from publishing and other sources.

For the year, the company clocked revenues of $332 million, representing a 31% increase over previous year revenue of $254 million. For the year, revenues were short of market expectations of $336 million. Its annual earnings stood at $0.64, which is substantially higher than $0.08 of the year before. Analysts were expecting earnings of $0.58.

WebMD’s reach can be gauged by the fact that during the quarter, it recorded an increase of 26% in unique users per month to reach 44.8 million users. It reaches one in every two U.S. adults, three of every four women, and 95% of all adults seeking health information online.

Its vast viewership is thanks to the company's new portal technology platform which has helped increase its search engine optimization, and the ability of its articles to be ranked higher in natural search results. The company's content ranks on the first pages of Google (NASDAQ:GOOG) and Yahoo (NASDAQ:YHOO) for 50% of frequently searched health terms.

Its partnerships with organizations like Medcenter have helped it expand its Medscape brand of health information into Spanish and Portugese speaking nations. In my Web 3.0 analysis of the online health industry, I mentioned how “niche positioning, premium and highly targeted content and strong demand” will lead to revenues for health portals. WebMD is a living and breathing example of that.

With products such as its private health care portals, drug search and symptom checker tool it tackles the niche positioning. Its quality content takes care of both online and offline competing media, and its interfacing with hospitals, physicians, pharmacy labs help the company retain satisfied customers. I stand by what I said earlier, WebMD has tremendous growth ahead.

The stock, however, hit its record 52 week low of $23.15 early March this year and is still trading at $23.77. This might just be the right time to buy WBMD.

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