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eHealth Surges 114% Year to Date: Will the Rally Continue?

Zacks Equity Research

eHealth, Inc.’s EHTH shares have surged 113.8% year to date, outperforming the industry's rise of 28.8% and Zacks S&P 500 composite’s increase of 16.5%. With market capitalization of $1.9 billion, average volume of shares traded in the last three months was 0.5 million. In fact, shares of the company hit a new 52-week high of $83.53 in its last trading session.


What’s Aiding the Upside?


eHealth’s Medicare business continues to deliver. The company remains committed to pursuing investments in Medicare-related marketing initiatives, expanding telesales capacity and enhancing technology platform and online sales capability. Its equity offering of $126 million will help it continue with organic growth strategies including capitalizing on the opportunities offered by the Medicare market and expanding the Medicare business at rates in excess of market growth.

Medicare segment revenues are now estimated between $281 million and $297 million in 2019, up from the earlier expectation of $256 million and $272 million.

The company’s individual and family plan business too continues to perform well. eHealth expects substantial increase in estimated lifetime values of individual and family plan members going forward and estimates revenues between $34 million and $38 million in 2019.

eHealth upped its 2019 revenue expectation to a range of $315 million to $335 million from the prior range of $290 million to $310 million. Adjusted EBITDA is estimated between $55 million and $60 million, up from the earlier expectation of $45 million to $50 million. Concurrently, adjusted earnings are expected between $1.54 and $1.73 per share, up from the earlier expectation of $1.11 and $1.25 per share.

eHealth boasts a solid balance sheet with improving liquidity position and no debt.

eHealth delivered positive earnings surprise in two of the last four reported quarters with the average beat being 127.23%.  It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for 2019 has been revised higher by 30.7% and 17.6% in the past 60 days.

The consensus mark for earnings indicates year-over-year improvement of 49.6% for 2019 and 28.9% for 2020.

The company has a favorable Growth Score of A. This style score analyzes the growth prospects of a company. Back-tested results show that stocks with a Growth Score of A or B coupled with a Zacks Rank #1 or #2 (Buy) offer better returns.  

Other Stocks to Consider

Some other top-ranked stocks in the insurance industry include Brown & Brown, Inc. BRO, Erie Indemnity Company ERIE and Cigna Corporation CI. Each of these stocks carries a Zacks Rank #2.

Brown & Brown markets and sells insurance products and services in the United States, England, Canada, Bermuda and the Cayman Islands. The company delivered positive surprise of 13.89% in the last reported quarter.

Erie Indemnity operates as a managing attorney-in-fact for subscribers at the Erie Insurance Exchange in the United States. The company delivered positive surprise of 5.11% in the last reported quarter.

Cigna provides insurance and related products and services in the United States and internationally. The company delivered positive surprise of 4.28% in the last reported quarter.

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