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eHealth (EHTH) Up 259% in a Year: What's Driving the Stock?

Zacks Equity Research

Shares of eHealth, Inc. EHTH have surged 258.8% in a year compared with the industry’s increase of 8.7%. The Zacks S&P 500 composite has however lost 1.5% in the said time frame. With market capitalization of $1.2 billion, average volume of shares traded in the last three months was 0.5 million.


What’s Driving the Stock?

The company delivered four-quarter average positive earnings surprise 20.80%.

eHealth generated $251.4 million in revenues, up 32% year over year and adjusted EBITDA of $33.7 million, up 610% year over year. Medicare applications grew 39% in 2018. Operating margin expanded 1100 basis points over 2017.

The company also provided guidance for 2019. Total revenues are expected between $290 million and $310 million. Revenues from the Medicare segment are expected between $256 million and $272 million while for the Individual, Family and Small Business segment, the same is expected between $34 million and $38 million.

Medicare segment profit is expected to be in the range of $80 million to $84 million and Individual, Family and Small Business segment profit is expected to be in the range of breakeven to $1 million. Adjusted EBITDA is estimated between $45 million and $50 million.

Operating net income is projected between $1.22 and $1.33 per share.

Cash used in operations is projected in the range of $17 million to $20 million.

eHealth is well poised to capitalize on the ongoing shift toward the Internet as a preferred channel for seniors to research and enroll into Medicare plans. The company has a compelling product portfolio, comprising group plans and ancillary products, including dental, vision, accident insurance, and short-term plans.

The company is focused on having more enrollments online, which should help lower acquisition costs per member. The company plans to invest more on digital marketing initiatives.

The Zacks Consensus Estimate for 2019 earnings and revenues indicates year-over-year improvement of 13.5% and 20.3%, respectively. For 2020, earnings and revenues are estimated to increase 50.3% and 20.1%, respectively year over year.

The stock currently carries a Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked stocks from the insurance industry are Arch Capital Group Ltd. ACGL, Berkshire Hathaway Inc. BRK.B and Torchmark Corporation TMK.

Arch Capital Group provides property, casualty and mortgage insurance and reinsurance products worldwide. The company delivered positive surprise in all the last four reported quarters, with the average being 14.72%. The company has a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here..

Berkshire Hathaway provides property and casualty insurance and reinsurance plus life, accident and health reinsurance besides operating railroad systems in North America. The company came up with positive surprise in three of the preceding four reported quarters, the average beat being 4.31%. The company is a Zacks #1 Ranked player.

Torchmark provides various life and health insurance products and annuities in the United States, Canada and New Zealand. The company pulled off positive surprise in three of the preceding four quarters, with the average beat being 2%. The company holds a Zacks Rank #2 (Buy).  

Zacks' Top 10 Stocks for 2019

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eHealth, Inc. (EHTH) : Free Stock Analysis Report
 
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