Investors in eHealth, Inc. (NASDAQ:EHTH) had a good week, as its shares rose 5.2% to close at US$57.68 following the release of its full-year results. eHealth reported in line with analyst predictions, delivering revenues of US$583m and statutory earnings per share of US$1.68, suggesting the business is executing well and in line with its plan. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Following the latest results, eHealth's eleven analysts are now forecasting revenues of US$688.8m in 2021. This would be a decent 18% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to soar 25% to US$2.18. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$752.6m and earnings per share (EPS) of US$2.70 in 2021. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a real cut to earnings per share estimates.
The consensus price target fell 15% to US$67.18, with the weaker earnings outlook clearly leading valuation estimates. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values eHealth at US$100.00 per share, while the most bearish prices it at US$47.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that eHealth's revenue growth will slow down substantially, with revenues next year expected to grow 18%, compared to a historical growth rate of 30% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 3.3% next year. Even after the forecast slowdown in growth, it seems obvious that eHealth is also expected to grow faster than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for eHealth. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for eHealth going out to 2025, and you can see them free on our platform here..
Plus, you should also learn about the 4 warning signs we've spotted with eHealth (including 1 which is potentially serious) .
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