On Feb 28, Zacks Investment Research downgraded
) by a notch to a Zacks Rank #5 (Strong Sell).
Why the Downgrade?
eHealth has been experiencing declining earnings estimates on
account of soft market reaction attributable to increased
spending, anticipated risks from the implementation of health
reforms and the absence lack of any near-term growth
Additionally, this private health insurer underperformed the
year-to-date Nasdaq index, which posted a growth of 3.4% against
eHealth's negative return of 0.3%. Furthermore, the company
delivered negative earnings surprises in 3 of the last 4 quarters
with an average beat of -30%.
On Feb 20, eHealthreported fourth-quarter 2013 operating loss
per share of 1 penny, which lagged the Zacks Consensus Estimate
of earnings of 1 cent and plunged from the prior-year quarter
earnings of 18 cents.
The decline was primarily driven by a 38.5% year-over-year
hike in total operating and other expense, which more than offset
the 19.6% jump in top line, overall generating a loss.
Consequently, operating cash flow decreased 16.1%, reducing
the cash position as well. Depreciated assets and equity may also
weaken capital position and raise risks on healthy capital
deployment going ahead.
Predictions of tepid growth have pulled down the Zacks
Consensus Estimate in 2014 by 62.1% to 22 cents a share in the
last 7 days. Meanwhile, the same for 2015 plunged 46.7% to 49
cents per share over the same period.
Meanwhile, the Most Accurate Estimate for eHealth's 2014
earnings stands at 15 cents a share, resulting in an
of -31.8%. No upward revision in estimates was witnessed for both
Other Stocks to Consider
While we prefer to avoid eHealthfor the time being, some
better-ranked insurers in the industry are
Marsh & McLennan Companies, Inc.
). All these stocks carry a Zacks Rank #2 (Buy).
CNINSURE IN-ADR (CISG): Free Stock Analysis
EHEALTH INC (EHTH): Free Stock Analysis
HANNOVER RUECKV (HVRRY): Get Free Report
MARSH &MCLENNAN (MMC): Free Stock Analysis
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