September 26, 2022

Cool Rabbits

Healthcare Enthusiast

Should You Retain eHealth (EHTH) Stock in Your Portfolio?

eHealth EHTH is poised for growth, banking on growing vision plan approved members, higher Medicare Supplement plan members, strong consumer demand, and a solid capital position.

Growth Projections

The Zacks Consensus Estimate for eHealth’s 2022 earnings indicates a year-over-year increase of 84.8%.

Earnings Surprise History

eHealth has a decent earnings surprise history. It beat estimates in three of the last four quarters and missed in one, with the average beat being 23.35%.

Business Tailwinds

eHealth continues to witness strong momentum in Medicare Advantage enrollment growth. The insurer has made significant progress toward enhancing 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 in the long run.

Higher commission revenues, higher individual and family major medical plan approved members, and dental plan approved members, increase in vision plan approved members and a continuing increase in the persistency of the existing book of business are likely to benefit the Individual, Family and Small Business segment’s revenues. EHTH continues to witness stronger member retention rates in LTV assessments for the majority of the earlier group of certain products in the Individual, Family and Small Business segment.

This segment continues to gain from the passing of the American Rescue Plan Act in March 2021 that expanded access to premium credits, making individual and family health plans reasonable. It allows a larger population to get quality coverage that their major medical plans offer. Higher revenues and a decrease in operating expenses are likely to boost the profits of this segment as well.

eHealth guides total revenue in the range of $535 million to $575 million in 2021. The Medicare segment’s revenues are expected to be $471 – $509 million in 2021. The individual, family, and small business segment’s revenues are expected to be in the range of $64 million to $66 million, higher than the earlier range of $59 million to $61 million.

The tailwinds have aided eHealth in maintaining a sustainable revenue growth trend over the past few years. The Zacks Consensus Estimate for 2022 revenues is pegged at $581 million. The figures indicate year-over-year increases of 6.77%.

eHealth also boasts a debt-free balance sheet with $227.7 million in cash, cash equivalents and marketable securities as of Sep 30, 2021.

Zacks Rank & Price Performance

eHealth currently carries a Zacks Rank #3 (Hold). In the past year, the stock has lost 62.9% against the industry’s growth of 20.1%. A solid performance of the Medicare business and robust capital position are expected to help the stock bounce back.

Image Source: Zacks Investment Research

Better-Ranked Industry Players

Some better-ranked companies from the same industry are Brown & Brown BRO, Marsh & McLennan Companies MMC and Fanhua FANH, 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’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average beat being 18.33%. In the past year, BRO has surged 44.8%.

The Zacks Consensus Estimate for Brown & Brown’s 2022 earnings has moved 0.4% north in the past 30 days. The Zacks Consensus Estimate for 2022 earnings indicates 5.1% year-over-year growth.

Marsh & McLennan’s earnings surpassed estimates in each of the last four quarters, the average beat being 13.45%. In the past year, MMC has gained 46.7%. The Zacks Consensus Estimate for Marsh & McLennan’s 2022 earnings has moved 0.4% north in the past seven days.

MMC’s expected long-term earnings growth rate is pegged at 12.9%, higher than the industry average of 12.6%. The Zacks Consensus Estimate for 2022 earnings indicates 9.4% year-over-year growth.

Fanhua’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average beat being 22.59%. In the past year, FANH has lost 45.6%.

The Zacks Consensus Estimate for Fanhua’s 2022 earnings has moved 0.9% north in the past 30 days. The Zacks Consensus Estimate for 2022 earnings indicates 23.1% year-over-year growth.

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.