shares fall on slowing growth worries

SAN FRANCISCO (AP) ?’s shares shed more than 7 percent Wednesday on fears that new pricing plans and less expensive competition will slow the genealogy service’s revenue growth.

THE SPARK: Morgan Stanley & Co. analyst Scott Devitt warned in a research note of possible trouble ahead.

Although he still sees a lot to like about, Devitt said he is worried that company’s average revenue per user will decline as it offers more ways to subscribe to its family-research service and other websites try to undercut its prices., has traditionally has offered its best rate to subscribers willing to make an annual commitment. The same U.S. price of $12.95 per month is now available on a half-year basis. The company also offers a three-month package at a slightly higher price.

Devitt downgraded’s stock from “overweight” to “equal weight” to account for the company’s anticipated slowdown in revenue growth.

In a Wednesday interview, CEO Timothy Sullivan said the company adopted the six-month subscription price because it thought it would be able to attract more subscribers with a price under $100.

“We think this is a great way to get more mainstream people on,” Sullivan said. “We feel very confident about our long-term prospects and our trajectory heading into 2012,” he said.

THE BIG PICTURE: Despite his misgivings, Devitt said he still thinks Ancestry’s com will steadily expand beyond the 1.7 million subscribers that the website had at the end of September. online tools for looking up family lineages should be particularly popular during an 11-week period beginning in February. That’s when NBC is expected to start the third season of its “Who Do You Think You Are?” television series, which relies on to explore the family histories of celebrities. The previous eight-episode installment of the series helped add 220,000 subscribers in the first quarter of this year. NBC is extended the series by three episodes next year, giving more opportunities to promote its service.

Devitt, though, thinks the revenue from the additional subscribers won’t be quite as high as he previously thought. He now expects to average $17.91 per subscriber next year, a nickel below his previous estimate.

THE ANALYSIS: Morgan Stanley’s cautionary report came the same day Goldman Sachs analyst Heath Terry initiated coverage of the company with a buy recommendation.

Terry’s thesis took a long-term view. He said he believes that is still in the early stages of mining a market that should swell to 13 million subscribers in the U.S. He also is optimistic about’s international expansion plans. Terry set a $33 price target for the stock.

SHARE ACTION: shares fell $1.71 to close at $21.28.