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Here's Why Hold Strategy is Apt for eHealth (EHTH) Stock Now
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eHealth, Inc. (EHTH - Free Report) is well-poised to grow on the back of Medicare, Individual and Family, and Small Business performance. Its cost curbing efforts are boosting profit levels. Over the year-to-date period, the stock has gained 53.1%, outperforming the industry average of 13%.
eHealth — with a market cap of almost $208.1 billion — is a health insurance marketplace operator. Courtesy of solid prospects, this currently Zacks Rank #3 (Hold) stock is worth retaining in your portfolio at the moment.
Let’s delve deeper.
The Zacks Consensus Estimate for EHTH’s current year earnings indicates 123.2% year-over-year improvement. The stock has witnessed one upward estimate revision in the past 60 days against none in the opposite direction. eHealth beat on earnings in two of the last four quarters and missed on other occasions, the average surprise being 33.4%. This is depicted in the graph below.
EHTH’s transformation initiatives are lowering its costs and expanding margins. In the first half of 2023, its total operating costs and expenses declined 21.3% due to lower marketing and advertising as well as customer care and enrolment. It expects adjusted EBITDA for the full year to be between a loss of $3 million and a profit of $17 million, implying a significant improvement from a loss of $41.7 million in 2022.
The consensus mark for current-year revenues is pegged at $448.2 million, suggesting a 10.6% rise from the prior-year reported number. Rising revenues from Medicare Advantage, Non-Qualified Health Plans and Sponsorships are likely to support top-line growth.
The Zacks Consensus Estimate for current-year commissions indicates 7.4% year-over-year jump, thanks to its solid Medicare business. Similarly, the consensus estimate for Individual and Family’s 2023 revenues predicts 18.8% growth from the year-ago level, backed by stable lifetime values. Increasing commission rate is expected to support LTVs.
Improving conversion rates across platforms and customer retention strategies are likely to play major roles in eHealth’s long-term growth. The company is expected to further diversify its revenue base, which will help it to navigate through tough times.
Key Risks
However, there are a few factors that investors should keep an eye on. Rising acquisition costs can constrain margins from reaching its true potential. Acquisition cost per MA-equivalent approved member rose 31% in the last reported quarter, while the same for Individual and Family Plan-equivalent approved members rose 23% year over year.
Also, despite expecting improving performance, EHTH kept its operating cash flow guidance flat from the previous view. Nevertheless, we believe that a systematic and strategic plan of action will drive the company’s growth in the long term.
The Zacks Consensus Estimate for Trupanion’s current year earnings has improved 12.7% in the past 60 days. Also, the consensus mark for TRUP’s 2023 revenues suggests 19.5% year-over-year growth.
The consensus mark for Ryan Specialty’s current year earnings indicates a 20.9% year-over-year increase. Furthermore, the consensus estimate for RYAN’s 2023 revenues in 2023 predicts 19.8% year-over-year rise.
The Zacks Consensus Estimate for Aegon’s current year earnings implies 42.1% year-over-year climb. In the past 60 days, AEG has witnessed one upward estimate revision against none in the opposite direction.
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Here's Why Hold Strategy is Apt for eHealth (EHTH) Stock Now
eHealth, Inc. (EHTH - Free Report) is well-poised to grow on the back of Medicare, Individual and Family, and Small Business performance. Its cost curbing efforts are boosting profit levels. Over the year-to-date period, the stock has gained 53.1%, outperforming the industry average of 13%.
eHealth — with a market cap of almost $208.1 billion — is a health insurance marketplace operator. Courtesy of solid prospects, this currently Zacks Rank #3 (Hold) stock is worth retaining in your portfolio at the moment.
Let’s delve deeper.
The Zacks Consensus Estimate for EHTH’s current year earnings indicates 123.2% year-over-year improvement. The stock has witnessed one upward estimate revision in the past 60 days against none in the opposite direction. eHealth beat on earnings in two of the last four quarters and missed on other occasions, the average surprise being 33.4%. This is depicted in the graph below.
eHealth, Inc. Price and EPS Surprise
eHealth, Inc. price-eps-surprise | eHealth, Inc. Quote
EHTH’s transformation initiatives are lowering its costs and expanding margins. In the first half of 2023, its total operating costs and expenses declined 21.3% due to lower marketing and advertising as well as customer care and enrolment. It expects adjusted EBITDA for the full year to be between a loss of $3 million and a profit of $17 million, implying a significant improvement from a loss of $41.7 million in 2022.
The consensus mark for current-year revenues is pegged at $448.2 million, suggesting a 10.6% rise from the prior-year reported number. Rising revenues from Medicare Advantage, Non-Qualified Health Plans and Sponsorships are likely to support top-line growth.
The Zacks Consensus Estimate for current-year commissions indicates 7.4% year-over-year jump, thanks to its solid Medicare business. Similarly, the consensus estimate for Individual and Family’s 2023 revenues predicts 18.8% growth from the year-ago level, backed by stable lifetime values. Increasing commission rate is expected to support LTVs.
Improving conversion rates across platforms and customer retention strategies are likely to play major roles in eHealth’s long-term growth. The company is expected to further diversify its revenue base, which will help it to navigate through tough times.
Key Risks
However, there are a few factors that investors should keep an eye on. Rising acquisition costs can constrain margins from reaching its true potential. Acquisition cost per MA-equivalent approved member rose 31% in the last reported quarter, while the same for Individual and Family Plan-equivalent approved members rose 23% year over year.
Also, despite expecting improving performance, EHTH kept its operating cash flow guidance flat from the previous view. Nevertheless, we believe that a systematic and strategic plan of action will drive the company’s growth in the long term.
Key Picks in Finance
Some better-ranked stocks in the broader Finance space are Trupanion, Inc. (TRUP - Free Report) , Ryan Specialty Holdings, Inc. (RYAN - Free Report) and Aegon N.V. (AEG - 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.
The Zacks Consensus Estimate for Trupanion’s current year earnings has improved 12.7% in the past 60 days. Also, the consensus mark for TRUP’s 2023 revenues suggests 19.5% year-over-year growth.
The consensus mark for Ryan Specialty’s current year earnings indicates a 20.9% year-over-year increase. Furthermore, the consensus estimate for RYAN’s 2023 revenues in 2023 predicts 19.8% year-over-year rise.
The Zacks Consensus Estimate for Aegon’s current year earnings implies 42.1% year-over-year climb. In the past 60 days, AEG has witnessed one upward estimate revision against none in the opposite direction.