Is WebMD (WMBD) on the mend?

Since the beginning of 2008, WebMD Health Corp. (WMBD) shares have tumbled -30%. It gets even worse when you look at their 52 week numbers, which reflect a -46% decrease for shareholders.

This is mainly due to revisions of 2008 earnings estimates.

But shares are once again trending upwards, with a 20% gain since April first. And I think I know why.

WMBD 1 year chart:

WebMD just recently lowered its 2008 outlook for the second time. Here are what the analysts have to say about that:

Stifel Nicolaus & Co.'s George Askew said the second revision is "incredibly frustrating" given that WebMD's pharmaceutical and healthcare-related advertising customers are generally believed to be less economically sensitive than the overall advertising community.

Goldman Sachs analyst Jennifer Watson agreed that the degree of the company's outlook revision and its explanation that drugmakers are hesitant to commit to advertising spending six to 12 months in advance are surprising, given that the healthcare sector is usually viewed as a defensive play in a weak market.

"The biggest question is whether the slower trends are WebMD-specific or industry-wide," she wrote in a note to clients. "Specifically, we wonder if advertisers are testing lower-cost options, including emerging ad networks that deliver impressions across smaller consumer health and beauty sites."

This looks like an obvious case of low-balling to me. It’s simple – you lower your outlook enough to where you can consistently beat earnings. Share price may take a fall in the short term, but you load up on stock at the 52 week low. Just look at all the insiders buying this year alone:

Stockmasters, the insiders know something here, you can bet that WebMD shares are on the mend.

Article written by Eric Cheshier

Co-Founder of theStockMasters.com

If you liked this article, Eric Cheshier also contributes to the Master Picks Newsletter and the Quant Method , only available at WallstNewsletters.com.