For Immediate Release

Chicago, IL – February 29, 2016– Zacks Equity Research highlightsWebMD (WBMD) as the Bull of the Day and KapStone Paper and Packaging Corp (KS) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Weight Watchers International Inc (WTW) and NutriSystem Inc (NTRI).

Here is a synopsis of all four stocks:

Bull of the Day:

WebMD (WBMD) is a $2 billion provider of online health information services to consumers, physicians, employers, health plans, and other healthcare professionals. The company connects with its customers through both public and private portals.

Through its public portals consisting of desktop and mobile offerings, the company provides personalized online healthcare information to consumers on its flagship site, WebMD.com. Revenue is generated primarily through advertisements and sponsorship agreements from pharmaceutical and health and wellness companies.

Through its private portals, like Medscape.com, WebMD offers health management applications for employers and health plans, and generates revenue typically on a per participant basis.

The Trifecta: Sales Beat, EPS Beat, Guidance Raised

Last week, WebMD reported 4Q15 results above expectations and provided strong guidance that compelled analysts to raise earnings estimates and price targets.

Management guided 2016 revenue, adjusted EBITDA and EPS above the Street as they are seeing strong ad demand from biopharma and are realizing operating leverage. The expected acceleration of biopharma ad revenue growth to 15% was what impressed analysts the most as it confirms the shift in pharma ad spend from traditional print and TV (offline) to online where WebMD has a leading position in this market.

My colleague Jeremy Mullin wrote about WebMD after earnings, picking the stock among 4 Internet Stocks to Buy Now. Here's what he had to say...

WebMD sports a Zacks Style Score of “B” in growth, but “D” in value. Because this valuation is in question short sellers have piled in with 19% of the stock short, giving the company a 7.5 short ratio and short squeeze potential. The company’s valuation is something investors have questioned in the past and exceeding earrings expectations is a catalyst for the stock price.

On February 23rd the company reported Q4 earnings of $0.60 a share versus the $0.57 expected. Revenue came in slightly higher for the quarter at $192 Million versus the $191 expected. In addition, the company went on to guide fiscal year 2016 revenue $685-705 Million versus $694 Million. Traffic on the website reached 201 million unique users per month, generating almost 4 billion page views for the quarter, increases of 6% and 7% from the prior year period.

The stock surged almost 5% higher after the numbers. It looks poised to take out all-time highs above $60.

The earnings beat isn’t much of a surprise as this makes its fifth EPS upside surprise in a row.

Bear of the Day :

Some companies have a bad day or two, but some get hit from all sides. One such company saw a mill shut down due to labor issues, lower tonnage prices, restarting plant issues (after the strike was over), lower productivity from another plant, and a big spike in one of their major input costs. That is why KapStone Paper and Packaging Corp (KS) is the Zacks Bear of the Day.

This Zacks Ranked #5 (Strong Sell) company was formed to effect a business combination with a suitable operating business in the paper, packaging, forest products and related industries. Headquartered in Northbrook, IL, KapStone Paper and Packaging Corporation is a leading North American producer of kraft paper and inflatable dunnage bags. The Company is the parent corporation of KapStone Kraft Paper Corporation which includes a paper mill in Roanoke Rapids, NC, and RideRite, an inflatable dunnage bag manufacturer in Fordyce, AR.

In their most recent earnings report, the company saw quarterly declines in Net Income (-65%), Diluted EPS (-66%), Adjusted EBITDA (-20%), Adjusted Net Income (-60%), and Adjusted Diluted EPS (-59%). The company also saw yearly declines in Net Income (-38%), Diluted EPS (-38%), Adjusted EBITDA (-11%), Adjusted Net Income (-28%), and Adjusted diluted EPS (-27%). This indicates that their earnings issues are not just in the most recent quarter, but have been around for the past 4 quarters.

According to Roger Stone, Chairman and CEO, “Fourth quarter was particularly disappointing due primarily to December's results. Seasonally weaker demand resulted in an eight-day market shutdown at our Longview mill and box plant, and product mix deteriorated. Our results were further negatively impacted by poor start-ups after Longview's outage and at Charleston after completion of a machine upgrade. Together, the market and maintenance downtimes resulted in a loss of 41,000 tons in the fourth quarter with an estimated EBITDA impact of $10 to $12 million. Although operationally our Charleston mill weathered the 1,000-year storm very well, fiber prices in the region soared but are expected to gradually be reduced as the region dries out.

Additional content:

Here’s Why Weight Watchers (WTW) and NutriSystem (NTRI) Have Crashed

On Friday, shares of two of the most popular weight loss companies have crashed: the recent Oprah Winfrey-endorsed Weight Watchers International Inc (WTW) and NutriSystem Inc ( NTRI).

As of 1:58 PM EST, WTW has fallen almost 27% while NTRI is down over 15% since trading began today.

Weight Watchers

Weight Watchers reported disappointing fourth quarter fiscal 2015 earnings yesterday. The company posted $-0.03 per share (excludes $0.15 from non-recurring items), missing the Zacks Consensus Estimate of $0.02.

The quarterly loss of $11 million was a surprise for the company, and especially the drop in subscribers and attendance at meetings, as expectations grew significantly after Winfrey first got invested in Weight Watchers.

In its earnings call with investors, Weight Watchers’ CFO Nicholas Hotchkin said that “While our trends in Q1 to date are strong, we anticipate reporting an (earnings per share) loss in the first quarter in the range of negative $0.20.”

Thus, it seems, the Oprah Winfrey magic may have worn off. CNN Money reported that “the value of Oprah’s stake in Weight Watchers fell by more than $27 million on Friday alone.” However, the billionaire mogul has still collected $30 million in profit since October.

NutriSystem

Unlike Weight Watchers, NutriSystem beat the Zacks Consensus Estimate by a penny, reporting fourth quarter fiscal 2015 adjusted earnings of $0.19 per share, an increase of 5.6% on a year-over-year basis. Revenues also increased 14% to $90.2 million for the quarter, topping our estimate of $89 million.

Despite these solid numbers, NutriSystem’s marketing expenses increased 15.6% on a year-over-year basis to $20.3 million, resulting in a 27.8% year-over-year decline in operating income.

Dawn Zier, President and Chief Executive Officer, said “We are building our strategic vision around a multi-brand and multi-product approach to capture an even more significant share of the weight loss market and expand into the broader health and wellness space.”

Mike Monahan, Chief Financial Officer, commented, “We achieved our 2015 financial goals and are projecting solid top and bottom line growth in 2016. We expect the investment costs related to the South Beach Diet and Shake360 will impact diluted income per common share by $0.14 in 2016 and are factored into our guidance. We expect these initiatives to be accretive in 2017 and deliver a favorable return on investment to stockholders.”

Currently, both Weight Watchers and NutriSystem are a #3 (Hold) on the Zacks Rank.

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WEBMD HEALTH CP (WBMD): Free Stock Analysis Report
 
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NUTRI/SYSTEM (NTRI): Free Stock Analysis Report
 
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