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Why WebMD (WBMD) Stock Is Soaring Today

NEW YORK (TheStreet) -- WebMD (WBMD) shares are up 19.5% to $44.92 in trading on Monday.

The jump follows the online health information provider's increased first quarter and full year financial guidance.

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The company expects its updated 2014 first quarter revenue guidance to land in the top half of the $130 million to $133 million range of its previous guidance. Analysts' consensus target for the quarter is $132.5 million.

"The update to our guidance that we are providing today reflects recent improvements in our sales activity compared to our experience in the early weeks of 2014," said CEO David Schlanger.

The company's website saw a first quarter year over year 32% increase to 174 million unique users per month, an increase in conjunction with a 26% increase to 3.5 billion page views during the same period.

TheStreet Ratings team rates WEBMD HEALTH CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate WEBMD HEALTH CORP (WBMD) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and generally higher debt management risk."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • WEBMD HEALTH CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, WEBMD HEALTH CORP turned its bottom line around by earning $0.33 versus -$0.44 in the prior year. This year, the market expects an improvement in earnings ($0.72 versus $0.33).
  • 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 277.6% when compared to the same quarter one year prior, rising from -$6.09 million to $10.81 million.
  • The gross profit margin for WEBMD HEALTH CORP is rather high; currently it is at 60.51%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, WBMD's net profit margin of 7.39% significantly trails the industry average.
  • The debt-to-equity ratio is very high at 4.99 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 5.92, which shows the ability to cover short-term cash needs.
  • Net operating cash flow has decreased to $24.18 million or 20.33% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • You can view the full analysis from the report here: WBMD Ratings Report
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