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Here's Why Investors Should Retain eHealth (EHTH) Stock Now
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eHealth (EHTH - Free Report) is poised for growth, banking on higher Medicare plan-approved members, new enrollments, solid Family and Small Business performance, and a robust capital position.
Growth Projections
The Zacks Consensus Estimate for 2021 and 2022 earnings per share is pegged at $2.97 and $3.67, indicating year-over-year increases of 22.2% and 23.5%, respectively.
Estimate Revision
Over the past 60 days, the stock has witnessed its earnings estimates for 2021 move 1.7% north. This should instill investors' confidence in the stock.
Earnings Surprise History
eHealth boasts an impressive surprise record, beating on earnings in all the trailing four quarters, the average being 66.02%.
Zacks Rank & Price Performance
The company currently carries a Zacks Rank #3 (Hold). In the past year, the stock has lost 51.6% against the industry’s growth of 21.4%.
Image Source: Zacks Investment Research
Business Tailwinds
eHealth continues to witness strong momentum in Medicare Advantage enrollment growth. Medicare Advantage enrollment growth has exceeded expectations in the second quarter. The insurer has made significant progress toward expanding and enhancing the telesales organization which is expected to drive the Medicare business.
An increase in Medicare plan-approved members, owing to growth in Medicare Advantage plan members, higher Medicare Supplement plan members, strong consumer demand, online enrollment growth, and an increase in internal agent productivity during the Medicare Advantage open enrollment period are expected to drive revenues for the Medicare segment, going forward.
The Medicare segment’s revenues are expected to be $601-$639 million in 2021. Profit is expected to be $130-$146 million.
A combination of strong enrollments and a continuing increase in the persistency of the existing book of business is likely to benefit the Individual, Family and Small Business segment’s revenues and profit growth. Higher approved members for qualified health plans and increased approved members in non-qualified health plans are expected to drive the Individual and Family Plan-approved members.
The Individual, Family and Small Business segment’s revenues are expected to be $59-$61 million in 2021, up from $39-$41 million stated earlier. Profit for the segment is expected to be $36-$38 million, up from the earlier mentioned $19-$20 million.
The tailwinds have aided eHealth in maintaining a sustainable revenue growth trend over the past few years. The Zacks Consensus Estimate for the company’s 2021 and 2022 revenues is pegged at $684.4 million and $804.1 million, respectively. The figures indicate year-over-year increases of 17.4% and 17.5%, respectively.
For 2021, total revenues are expected to be $660-$700 million. Adjusted EBITDA for 2021 is estimated to be $110-$125 million, in line with the prior range.
eHealth exited the second quarter with cash and cash equivalents, which surged more than five-fold from the 2020-end level. For 2021, cash used in operations is expected to be $85-$95 million, and cash used for capital expenditure is projected to be $24-$27 million.
Image: Bigstock
Here's Why Investors Should Retain eHealth (EHTH) Stock Now
eHealth (EHTH - Free Report) is poised for growth, banking on higher Medicare plan-approved members, new enrollments, solid Family and Small Business performance, and a robust capital position.
Growth Projections
The Zacks Consensus Estimate for 2021 and 2022 earnings per share is pegged at $2.97 and $3.67, indicating year-over-year increases of 22.2% and 23.5%, respectively.
Estimate Revision
Over the past 60 days, the stock has witnessed its earnings estimates for 2021 move 1.7% north. This should instill investors' confidence in the stock.
Earnings Surprise History
eHealth boasts an impressive surprise record, beating on earnings in all the trailing four quarters, the average being 66.02%.
Zacks Rank & Price Performance
The company currently carries a Zacks Rank #3 (Hold). In the past year, the stock has lost 51.6% against the industry’s growth of 21.4%.
Image Source: Zacks Investment Research
Business Tailwinds
eHealth continues to witness strong momentum in Medicare Advantage enrollment growth. Medicare Advantage enrollment growth has exceeded expectations in the second quarter. The insurer has made significant progress toward expanding and enhancing the telesales organization which is expected to drive the Medicare business.
An increase in Medicare plan-approved members, owing to growth in Medicare Advantage plan members, higher Medicare Supplement plan members, strong consumer demand, online enrollment growth, and an increase in internal agent productivity during the Medicare Advantage open enrollment period are expected to drive revenues for the Medicare segment, going forward.
The Medicare segment’s revenues are expected to be $601-$639 million in 2021. Profit is expected to be $130-$146 million.
A combination of strong enrollments and a continuing increase in the persistency of the existing book of business is likely to benefit the Individual, Family and Small Business segment’s revenues and profit growth. Higher approved members for qualified health plans and increased approved members in non-qualified health plans are expected to drive the Individual and Family Plan-approved members.
The Individual, Family and Small Business segment’s revenues are expected to be $59-$61 million in 2021, up from $39-$41 million stated earlier. Profit for the segment is expected to be $36-$38 million, up from the earlier mentioned $19-$20 million.
The tailwinds have aided eHealth in maintaining a sustainable revenue growth trend over the past few years. The Zacks Consensus Estimate for the company’s 2021 and 2022 revenues is pegged at $684.4 million and $804.1 million, respectively. The figures indicate year-over-year increases of 17.4% and 17.5%, respectively.
For 2021, total revenues are expected to be $660-$700 million. Adjusted EBITDA for 2021 is estimated to be $110-$125 million, in line with the prior range.
eHealth exited the second quarter with cash and cash equivalents, which surged more than five-fold from the 2020-end level. For 2021, cash used in operations is expected to be $85-$95 million, and cash used for capital expenditure is projected to be $24-$27 million.
Better-Ranked Industry Players
Some better-ranked companies from the same industry are Brown & Brown (BRO - Free Report) , Marsh & McLennan Companies (MMC - Free Report) and Arthur J. Gallagher & Co. (AJG - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Brown & Brown surpassed estimates in each of the last four quarters, the average beat being 21.40%.
Marsh & McLennan surpassed estimates in each of the last four quarters, the average beat being 13.88%.
Arthur J. Gallagher surpassed estimates in each of the last four quarters, the average beat being 13.51%.