The latest analyst coverage could presage a bad day for eHealth, Inc. (NASDAQ:EHTH), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.
Following the downgrade, the most recent consensus for eHealth from its ten analysts is for revenues of US$753m in 2021 which, if met, would be a major 27% increase on its sales over the past 12 months. Statutory earnings per share are presumed to step up 16% to US$3.40. Before this latest update, the analysts had been forecasting revenues of US$846m and earnings per share (EPS) of US$4.65 in 2021. Indeed, we can see that the analysts are a lot more bearish about eHealth's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.
It'll come as no surprise then, to learn that the analysts have cut their price target 38% to US$78.64. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values eHealth at US$124 per share, while the most bearish prices it at US$47.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We can infer from the latest estimates that forecasts expect a continuation of eHealth'shistorical trends, as next year's 27% revenue growth is roughly in line with 28% annual revenue growth over the past five years. Compare this with the wider industry, which analyst estimates (in aggregate) suggest will see revenues grow 4.9% next year. So although eHealth is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of eHealth.
There might be good reason for analyst bearishness towards eHealth, like dilutive stock issuance over the past year. For more information, you can click here to discover this and the 2 other concerns we've identified.
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