RBC Sees 'Little Incremental Risk' To WebMD's Franchise Amid Google Health Content Tweak

Specifically, Google extended its KnowledgeGraph to include "symptom search" capabilities. Investors then speculated if Google and its parent company Alphabet Inc GOOG GOOGL plan on entering the online consumer health content space and pose a competitive threat to WebMD's business.

Investors shouldn't worry about this scenario, at least according to David Francis of RBC Capital Markets. In a report published Tuesday, the analyst suggested that Google's introduction of "symptom search" is just a "natural extension" of its already existing health related search offerings.

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"While symptom search has the potential to create a marginal point of leakage for WebMD traffic, we believe that WebMD's Consumer business remains well established and highly valuable," Francis wrote.

Francis noted that WebMD's consumer portal only accounts for 35 to 40 percent of its advertising revenue, and any leakage in traffic would "have at worst small impact" on its earnings. In addition, WebMD's Medscape (professional portal) business is unaffected by Google's efforts.

Bottom line, Francis stated that Google's inclusion of "symptom search" by itself is "not a meaningful risk" to WebMD's business and earnings power. As such, he sees "little incremental risk" for the time being, but it is important to monitor Google's activity and determine if future moves could have a more meaningful impact on WebMD's business.

Shares of WebMD remain Outperform rated with an unchanged $75 price target. At time of writing, the stock was down 1.10 percent at $60.17.