NEW YORK (AP) — Shares of WebMD fell Thursday after Raymond James suggested the company's earnings and revenue could fall further in 2013.
THE SPARK: Analyst Alexander Draper lowered his rating to "Underperform" from "Market Perform." While WebMD expects to lose money this year and is predicting a sharp decline in revenue, Draper said its EBITDA — earnings before interest, taxes, depreciation and amortization — and total revenue will get lower in 2013 and the shares will continue to decline.
"We are concerned not only that the macro environment will remain challenging, but also that WebMD's troubles include increasing competition and deteriorating pricing," Draper wrote in a note to clients.
THE BIG PICTURE: The New York company says many pharmaceutical customers are re-evaluating their marketing expenses as they deal with the expiration of patents protecting their products and unanticipated delays in Food and Drug Administration approval for new products. WebMD is also experiencing more competition from social networking sites and ad networks.
WebMD is forecasting $455 million and $480 million in revenue this year, down from $558.8 million in 2011. Draper said he expects WebMD to report $460 million in revenue in 2012, and said revenue will decline 5 percent to $437 million in 2013.
Analysts surveyed by FactSet are forecasting $465.7 million in revenue in 2012, near the middle of WebMD's current estimates. On average they expect a slight improvement to $469.7 million in 2013.
SHARE ACTION: Shares of WebMD lost 51 cents, or 3.3 percent, to $14.84 in afternoon trading. The stock is down 58 percent since Jan. 9. On Jan. 10, WebMD said it expected a significant decrease in income in 2012, said it had stopped talking to potential acquirers, and announced the resignation of CEO Wayne Gattinella.