Bankrate shares tumble on projected 3Q profit drop

NEW YORK -- Shares of Bankrate Inc. lost about a quarter of their value and fell to an all-time low Tuesday, after the online publisher of financial data predicted third-quarter results that fell far short of Wall Street forecasts.

THE SPARK: Bankrate said Monday that it expects earnings per share, excluding costs related to its initial public stock offering and other expenses, of 11 to 13 cents per share in the July-September quarter, down from 18 cents per share a year ago. Analysts polled by FactSet had expected 20 cents per share.

The company also projected revenue of $115.5 million to $117.5 million, up from $112.9 million in last year's third quarter, but significantly below analysts' prediction of $132 million. It was more downbeat about revenue growth over the course of the year, now predicting growth of 8 to 12 percent instead of its older forecast of more than 20 percent growth.

Bankrate plans to release full results on Nov. 1.

THE BIG PICTURE: Bankrate, which went public in June 2011, runs and other personal finance websites. The company also provides services to personal finance sites such as Yahoo, AOL, CNBC and Bloomberg, licenses editorial content to more than 100 newspapers and provides information to mortgage lenders, credit card issuers and insurance companies.

The company said the guidance cuts were partially a result of its efforts to cut back its insurance lead volume and improve their quality. In addition, the company said volumes at its credit card business remained flat, as card issuers remain cautious about approvals.

THE ANALYSIS: Citi analyst Mark Mahaney backed his "Buy" rating for the company, but cut his price target by $11 to $15 in light of the reduced outlook.

THE SHARES: Down $3.72, or 26 percent, to $10.78 in extremely heavy midday trading, after dropping as low as $10.30 earlier in the day, easily passing their 52-week low of $13.93. The company went public at $15 per share.