ValueClick tumbles after weak forecast

ValueClick stock drops after 2Q revenue and outlook fall below expectations

Associated Press

WESTLAKE VILLAGE, Calif. (AP) -- Shares of ValueClick Inc. tumbled Friday after the digital marketing company reported second-quarter revenue below Wall Street's expectations and gave a disappointing forecast.

THE SPARK: The company reported a 4 percent revenue increase in the April-June quarter to $159.8 million, which was shy of the $166 million that analysts polled by FactSet expected. ValueClick attributed the revenue weakness to its display ads business. Display ads include banner ads on the Web.

Its outlook for the current quarter was also below expectations. ValueClick expects revenue of $164 million to $168 million and adjusted earnings of 39 or 40 cents per share for the third quarter. Analysts expected revenue of $180 million and earnings of 43 cents per share.

BACKGROUND: The Westlake Village, Calif.-based company provides online advertising services to companies and analyzes how well their ads work.

ANALYST COMMENT: Jefferies analyst Brian Pitz lowered his target price to $29 from $35 but kept a "Buy" rating on the stock. He said growth was "modest" in the company's display business due to a "fairly weak display market to begin with, amplified by client-specific budget changes" in the middle of the quarter that drove spending out of the second quarter. He added that he expects another tough quarter for the display business.

SHARE ACTION: Down $4, or 15.9 percent, to $21.10 in morning trading. The stock has traded in the 52-week range of $15.11 and $32.25.

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