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eHealth Gains 19% YTD: Can the Stock Retain the Momentum?

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eHealth, Inc.’s (EHTH - Free Report) shares have gained 19.2% year to date against the industry's decline of 8.1% and the Zacks S&P 500 composite’s decrease of 12.4%. With market capitalization of $2.9 billion, average volume of shares traded in the last three months was 0.5 million.

The rally was largely driven by the solid performance of the Medicare business. Revenues at core Medicare business grew 75% year over year while profit increased 103% in the first quarter of 2020. The company delivered positive surprise in each of the last five reported quarters with the average beat being 165.22%.

What’s Driving It?

eHealth’s Medicare business continues to deliver. The company’s investments in Medicare-related marketing initiatives and expansion of telesales capacity and online sales capability continue to drive growth. In fact, the company raised $227 million through an equity offering to fund organic growth endeavors in core Medicare market that in turn should increase customer retention and boost online engagement and conversion rates. eHealth expects Medicare enrollment in the second quarter to be solid.

Medicare segment revenues are expected between $553 million and $589 million in 2020, up from the earlier expectation of $533 million and $569 million. Profit is now expected to be in the range of $157 million to $174 million, up from $152 million to $169 million expected earlier.

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. Revenues from the business are likely to be between $47 million and $51 million in 2020.

eHealth upped its 2020 revenue expectation to a range of $600 million to $640 million from the prior range of $580 million to $620 million. Adjusted EBITDA is estimated between $125 million and $140 million, up from the earlier expectation of $120 million and $135 million.

The company also boasts a debt free balance sheet with $246 million in cash, cash equivalents and marketable securities as of Mar 31, 2020.

Return on equity, a measure identifying how efficiently the company is utilizing its shareholders’ fund, was 15.8% in the first quarter of 2020, up from 5.8% in the year-ago period

It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks to Consider

Some other top-ranked companies in the insurance industry are  EverQuote Inc (EVER - Free Report) , James River Group Holdings Ltd (JRVR - Free Report) and Kemper Corporation (KMPR - Free Report) , each carrying a Zacks Rank #2 (Buy).

EverQuote surpassed estimates in each of the last four quarters, with the average positive surprise being 86.67%.

James River Group surpassed estimates in three of the last four quarters, with the average positive surprise being 7.31%.

Kemper surpassed estimates in the last four quarters, with the average positive surprise being 16.25%.

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