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eHealthInsurance is scheduled to report their fourth quarter
2008 results after the market closes on Thursday, February 12.
Based on our analysis, we at
eChristianInvesting are expecting EHTH to report inline
results that meet Wall Street’s expectations.
Analyst
Expectations
We are
forecasting revenues of $29.3 million and EPS of $.12. This
would represent a 21% growth in revenues from last year’s $24.2
million in the same period. The current analyst consensus calls
for revenues of $29.5 million and $.12 EPS. On October 30, the
company reiterated its full year revenue guidance which would
imply fourth quarter revenues of $29.2 – 31.2 million.
While the
overall economy is certainly struggling with declining consumer
spending, we believe that most consumers do not consider health
insurance to be a discretionary item. We anticipate that EHTH
will benefit even in this poor economic environment as consumers
become more diligent in looking at ways to reduce expenses.
Our checks
show that traffic growth continues to be strong for
ehealthinsurance.com. We would expect that EHTH may see some
lift to margins as declining advertising prices allow it to
become more efficient with its marketing spending.
Although
it seems that many internet companies have ceased giving
guidance for 2009, we believe that EHTH’s strong revenue model
should allow management good visibility into the coming months.
Wall Street is currently expecting 18% growth in 2009 and we
feel that is certainly achievable and would expect guidance to
be in that range.
Share
Performance
eHealthInsurance’s shares are up 7% since the beginning of the
year. In 2008, the shares took a severe beating – dropping 59%
compared to the Dow Jones index’s 34% drop.
Valuation
Shares are
now trading at 23x consensus 2009 EPS estimates. This is inline
with the relative valuations of their peer group. We believe the
market will react positively even if the company simply meets
expectations. The company’s market position and ability to
achieve double-digit growth even in a recessionary environment
should be viewed very positively by investors
Recommendation:
Buy with a $18 price target.
At the time this article was published, the author did not have
a financial position in any of the stocks mentioned in this
article.
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