eHealth (EHTH) Rallies 90% YTD: Can It Retain the Bull Run?
eHealth’s EHTH shares have gained 89.5% year to date, outperforming the industry’s increase of 5%. The Finance sector and the Zacks S&P 500 composite have risen 3.8% and 14.8%, respectively, in the same period. With a market capitalization of $254.1 million, the average volume of shares traded in the last three months was 0.5 million.
Solid Medicare and Individual, Family and Small Business performance and financial position continue to drive this Zacks Rank #3 (Hold) insurer. Earnings surpassed estimates in two of the last four reported quarters while missing in the other two.
The company has a VGM Score of B. The Style Score rates stocks on combined weighted styles, helping to identify those with the most attractive value, best growth and most promising momentum.
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Can EHTH Retain the Momentum?
The Zacks Consensus Estimate for EHTH’s 2023 earnings per share indicates an increase of 64% on 1.2% higher revenues. The Zacks Consensus Estimate for 2024 earnings suggests an increase of 522% on 7.9% higher revenues.
It has a Growth Score of A. This score analyzes the growth prospects of a company.
In its efforts to diversify revenue streams, EHTH targets enrollment growth. It is banking on a demand generation strategy, focusing on audience segmentation, and targeting differentiated messaging and gradual scaling of direct and strategic partner and marketing channels.
EHTH estimates revenue in the second and third quarters of 2023 to be flat to slightly down year over year and be on growth track in the fourth quarter. Fourth-quarter revenues are expected to grow at a double-digit percentage rate year over year, driven by higher commission revenues as well as a carrier dedicated business model.
eHealth continues to witness strong momentum in Medicare Advantage (MA) enrollment growth. The insurer has made significant progress toward enhancing telesales organization. In fact, first- quarter earnings benefited from a significant improvement in telephonic conversion rates that increased 21% year over year in the first quarter of 2023.
eHealth is well poised to capitalize on the opportunities the MA market offers.
Individual, family, small business and ancillary product segments should continue to benefit from strong renewal revenues from the small business group product as well as improved IFP enrollment volume.
Recently, EHTH revealed its three-year financial targets. It expects revenues to grow on the back of its diversification efforts. Adjusted EBITDA is likely to witness a $37 million improvement in 2023. By 2025, eHealth intends to achieve an 8-10% adjusted EBITDA margin from (10%) in 2022. Also, by the trailing 12-month period ending March 2025, the company expects to enter the positive operating cash flow region. The insurer stated that driving increased member retention is the main component of its three-year strategy in its 2023 operating plan.
Stocks to Consider
Some better-ranked stocks from the insurance industry are Erie Indemnity ERIE, Brown and Brown BRO and Ryan Specialty Group Holdings RYAN, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Erie Indemnity’s 2023 and 2024 earnings per share (EPS) indicates a year-over-year increase of 26.1% and 13.6%, respectively. Shares have lost 12.3% year to date.
The Zacks Consensus Estimate for BRO’s 2023 and 2024 EPS indicates a respective 10.5% and 9.2% increase year over year. BRO delivered a four-quarter average earnings surprise of 1.19%. Shares have risen 13.7% year to date.
The Zacks Consensus Estimate for Ryan Specialty’s 2023 and 2024 EPS indicates a year-over-year increase of 15.7% and 23.3%, respectively. RYAN delivered a four-quarter average earnings surprise of 2.98%. Shares have risen 2.5% year to date.
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Brown & Brown, Inc. (BRO) : Free Stock Analysis Report
Erie Indemnity Company (ERIE) : Free Stock Analysis Report
eHealth, Inc. (EHTH) : Free Stock Analysis Report
Ryan Specialty Holdings Inc. (RYAN) : Free Stock Analysis Report
