eHealth, Inc.

eHealth Inc. (NASDAQ: EHTH) provides a health insurance marketplace with a technology and service platform that provides consumer engagement, education and health insurance enrollment solutions.

Why Should Investors Sell the Stock?

• Over Stretched Valuation: From Price to Earnings multiple standpoints, EHTH shares are extremely overvalued, as TTM P/E multiple of the company stood at 44.04x, whereas average industry peers are trading at TTM P/E multiple of 28.54x. This implies a premium of 54%. This premium valuation is not backed by strong financials as reported EBITDA margin, Operating margin, and Net Margin for Q1 FY21 was below the industry median.  For Q1 FY21, EHTH’s EBITDA Margin was 4.4% v/s Industry Median of 28.2%. Also, company registered negative Operating and Net Margins. For Q1 FY21, EHTH’s operating margins was (0.5%) v/s Industry median of 24.7% while net margin was (0.5%) v/s Industry median of 12.9%. Furthermore, company witnessed declining margins on a sequential basis, below is the glimpse for the same.

• Bearish Technical Indicators: EHTH shares are trading in a bearish zone, with 14-day RSI hovering below 40 and stock trading well below the 200-day and 50-day SMAs, which implies a long-term bearish trend.

Source: REFINITIV, Analysis by Kalkine Group 

Stock Recommendation:

EHTH shares are hovering in a bearish price trend, moreover the company’s shares are extremely overvalued despite significantly weak financials. Also, the company is generating lower return for its shareholders, with TTM ROE of 5% well below the industry median of 12%.  Therefore, we recommend a “Sell” rating on the stock at the current market price of USD 55.78 on July 29, 2021.

*The reference data in this report has been partly sourced from REFINITIV.

Disclaimer

The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.