A Goldman Sachs analyst downgraded shares of WebMD Health Corp. Wednesday, becoming the second analyst this week to voice concerns about competition to the health information Web site.
Jennifer Watson downgraded the stock to "Sell" from "Neutral," and said in a client note that new, lower-priced networks could take a larger portion of advertising revenue from pharmaceutical companies. She added that pharmaceutical advertisers may cut back on spending due to uncertainty in the economy.
Those issues and difficult comparisons could lead to weaker licensing revenue growth, Watson said. She feels the stock is getting a lift from buyout speculation, but she said that is unlikely.
On Monday, William Morrison of ThinkPanmure expressed similar concerns in downgrading the stock to "Sell" from "Source of Funds." He said shares had become expensive over the last few weeks, and the number of ad campaigns and new advertisers on WebMD's site was falling compared with the first quarter.
He added that growth in health-related Internet ads is slowing and competition to WebMD is increasing.
Both analysts hold a price target of $28 per share, and the stock closed at $34.57 Tuesday.
Five analysts currently rate share of WebMD at "Neutral" or the equivalent, while two give "Sell" ratings and four assign "Buy" ratings.
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