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Why You Should Add eHealth (EHTH) Stock to Your Portfolio

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eHealth’s (EHTH - Free Report) solid Medicare and Individual, Family and Small Business performance and financial position along with favorable growth estimates make it a good investment choice.

Zacks Rank & Price Performance

eHealth sports a Zacks Rank #1 (Strong Buy). In the past month, the stock has rallied 32.2%, outperforming the industry’s growth of 4.5%, Finance sector’s rise of 2.2% and the Zacks S&P 500 composite's increase of 5.2%.

Growth Projections

The Zacks Consensus Estimate for 2021 earnings is pegged at $2.81, indicating a year-over-year increase of 15.6% on 17.4% higher revenues of $684.2 million. The consensus estimate for 2022 earnings is pegged at $4.54, indicating an upside of 61.6% on 24.7% higher revenues of $853.3 million.

Earnings Surprise History

eHealth delivered an earnings surprise in each of the last eight reported quarters with the average beat being 125.3%, reflecting operational excellence.

Business Tailwinds

eHealth remains focused on gradual shift in telesales from third-party vendor agents toward in-house agents.. This in turn will fuel growth in Medicare business. Revenues from the Medicare segment are expected between $621 million and $659 million, the midpoint indicating 24% growth over 2020.

With continued momentum in the online Medicare enrollments, the private health insurance exchange service provider estimates 53% online penetration by 2024. This in turn should continue to drive member retention.

Substantial increase in estimated lifetime values of individual and family plan members should continue to drive Individual, Family and Small Business segment. Revenues in 2021 are estimated between $39 million and $41 million.

eHealth projects total revenues in 2021 between $660 million and $700 million, with the midpoint indicating 17% year-over-year growth.

In its effort to fuel growth and increase market share through high quality Medicare enrollments, the company entered into a binding agreement with HIG Capital via which the latter will make a $225 million investment in eHealth.

The company plans to ramp up its revenues at a five-year CAGR of 27% by 2024 and achieve adjusted EBITDA margin of 38%.

Segment profit is expected in the range of $138 million to $155 million from Medicare, and in the range of $18 million to $19 million from Individual, Family and Small Business in 2021.

Adjusted EBITDA in 2021 is estimated between $100 million and $115 million. Net income is expected between $2.77 and $3.26 per share.

Debt Free Balance Sheet

The company boasts a debt free balance sheet with $93.4 million in cash, cash equivalents and marketable securities as of Dec 31, 2020.

Other Stocks to Consider    

Some other top-ranked stocks in the insurance industry include Aon (AON - Free Report) , Brown and Brown (BRO - Free Report) and James River Group Holdings (JRVR - Free Report) , each carrying Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Aon delivered an earnings surprise of 5.65% in the last reported quarter.

Brown and Brown delivered an earnings surprise of 14.29% in the last reported quarter.

James River Group delivered an earnings surprise of 6.86% in the last reported quarter

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