WebMD, a Healthy M&A Target?

Written by GSCR Staff   
Thursday, 27 October 2016 07:06

In Monday’s Guide, we discussed the coming deal with Time Warner (NYSE—TMX) and AT&T (NYSE—ATT) and how it could be a catalyst for coming media deals. The presidential election is now 12 days away and this week it was announced that 2017 premiums for Obamacare will more than double. This has been political fodder for the GOP, especially candidate Trump. We have decided to look in the healthcare space for a potential deal in 2017. Why? There is no doubt if Trump gets elected and the Republicans maintain control of Congress, repeal and replace will be at the top of the 100-day agenda. We also believe a President Clinton will try and work out something in the way of a compromise on this area, at least to start out the administration on solid footing.

WebMD Health Corporation (NASDAQ – WBMD - $51.82) is a little out of our normal price and market cap range, but we believe could be a solid play on the healthcare front. Below, the chart illustrates the one year performance of the stock which indicates it is now trading over the 25-day EMA and appears to be gaining momentum for another accumulation run.

WBMD 1-Year, 25-Day EMA

(Source: www.otcmarkets.com)

MM.10.27.16.WBMD-1yr-25ema

WebMD is a solidly innovative Company merging technology and healthcare providing 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. Its primary public portal is WebMD.com, which enables consumers to obtain information on health and wellness topics or on a disease or condition; assess personal health status; use online trackers, tools, and quizzes; locate physicians; receive periodic e-mailed newsletters and alerts on topics of individual interest; and participate in online communities with peers and experts. The Company’s public portal, Medscape.com also enables physicians and healthcare professionals to access clinical reference sources; stay abreast of the latest clinical information; learn about new treatment options; earn continuing medical education credit; and communicate with peers. It also offers private portals and related services under the WebMD Health Services brand.

This first statistic we like, particularly when it comes to M&A is EBITDA versus Enterprise Value. WebMD currently has a low value of 12. Back on the technical side, the short float is under 5%. Additionally, margins are impressive as well. A profit margin of 11% and operating margin of 21% are well above industry averages. Finally, we have been stressing performance lately, and the Company has hit or surpassed EPS estimates four straight quarters.

In summary, we believe WBMD is a solid stock with a great chance to take off in 2017 given healthcare reform will be another top priority. Set target of $65 for next year.

Have a great day!

Goldman Small Cap Research is not affiliated in any way with Goldman Sachs & Co.

It is important to note that while we may track performance separately, we utilize the same coverage criteria in determining coverage of all stocks in both research formats. Please view the company’s individual disclosures for each engagement, which can be found in each company-specific report. All information contained in this blog, newsletter and in our reports were provided by the Companies or generated from our own due diligence. Our analysts are responsible only to the public, and are paid in advance to eliminate pecuniary interests, retain editorial control, and ensure independence. Analysts are compensated on a per report basis and not on the basis of his/her recommendations.

The information used and statements of fact made have been obtained from sources considered reliable but we neither guarantee nor represent the completeness or accuracy. Goldman Small Cap Research did not make an independent investigation or inquiry as to the accuracy of any information provided by the Company, or other firms. Goldman Small Cap Research relied solely upon information provided by the Company through its filings, press releases, presentations, and through its own internal due diligence for accuracy and completeness. Such information and the opinions expressed are subject to change without notice. A Goldman Small Cap Research blog, report, note, or newsletter is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed.

This blog does not take into account the investment objectives, financial situation, or particular needs of any particular person. This blog does not provide all information material to an investor’s decision about whether or not to make any investment. Any discussion of risks in this presentation is not a disclosure of all risks or a complete discussion of the risks mentioned. Neither Goldman Small Cap Research, nor its parent, is registered as a securities broker-dealer or an investment adviser with FINRA or with any state securities regulatory authority.

ALL INFORMATION IN THIS BLOG, REPORT OR NEWSLETTER IS PROVIDED “AS IS” WITHOUT WARRANTIES, EXPRESSED OR IMPLIED, OR REPRESENTATIONS OF ANY KIND. TO THE FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE FOR THE QUALITY, ACCURACY, COMPLETENESS, RELIABILITY OR TIMELINESS OF THIS INFORMATION, OR FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES THAT MAY ARISE OUT OF THE USE OF THIS INFORMATION BY YOU OR ANYONE ELSE (INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, LOSS OF OPPORTUNITIES, TRADING LOSSES, AND DAMAGES THAT MAY RESULT FROM ANY INACCURACY OR INCOMPLETENESS OF THIS INFORMATION). TO THE FULLEST EXTENT PERMITTED BY LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE TO YOU OR ANYONE ELSE UNDER ANY TORT, CONTRACT, NEGLIGENCE, STRICT LIABILITY, PRODUCTS LIABILITY, OR OTHER THEORY WITH RESPECT TO THIS PRESENTATION OF INFORMATION.

For more information, visit our Disclaimer: www.goldmanresearch.com

Add comment
  • No comments found