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WebMD Health Corporation (WBMD) Marked As A Barbarian At The Gate

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified WebMD Health Corporation (WBMD) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified WebMD Health Corporation as such a stock due to the following factors:

  • WBMD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $26.8 million.
  • WBMD has traded 550,142 shares today.
  • WBMD traded in a range 286.6% of the normal price range with a price range of $3.62.
  • WBMD traded above its daily resistance level (quality: 531 days, meaning that the stock is crossing a resistance level set by the last 531 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on WBMD:

WebMD Health Corp. provides health information services to consumers, physicians and other healthcare professionals, employers, and health plans through its public and private online portals, mobile platforms, and health-focused publications in the United States. Currently there are 2 analysts that rate WebMD Health Corporation a buy, 1 analyst rates it a sell, and 3 rate it a hold.

The average volume for WebMD Health Corporation has been 878,400 shares per day over the past 30 days. WebMD Health has a market cap of $1.4 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.10 and a short float of 15.2% with 5.85 days to cover. Shares are up 105.6% year to date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates WebMD Health Corporation as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income and revenue growth. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and generally higher debt management risk.

Highlights from the ratings report include:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet Software & Services industry. The net income increased by 146.7% when compared to the same quarter one year prior, rising from -$5.59 million to $2.61 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 12.0%. Since the same quarter one year prior, revenues rose by 11.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • WEBMD HEALTH CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, WEBMD HEALTH CORP swung to a loss, reporting -$0.44 versus $1.07 in the prior year. This year, the market expects an improvement in earnings ($0.21 versus -$0.44).
  • The debt-to-equity ratio of 1.49 is relatively high when compared with the industry average, suggesting a need for better debt level management. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 7.38, which shows the ability to cover short-term cash needs.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Internet Software & Services industry and the overall market, WEBMD HEALTH CORP's return on equity significantly trails that of both the industry average and the S&P 500.

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