The Consensus EPS Estimates For eHealth, Inc. (NASDAQ:EHTH) Just Fell Dramatically

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. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

After the downgrade, the ten analysts covering eHealth are now predicting revenues of US$753m in 2021. If met, this would reflect a substantial 27% improvement in sales compared to the last 12 months. Per-share earnings are expected to expand 16% to US$3.40. Prior to this 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.

See our latest analysis for eHealth

It'll come as no surprise then, to learn that the analysts have cut their price target 38% to US$78.64. 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$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.

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. Next year brings more of the same, according to the analysts, with revenue forecast to grow 27%, in line with its 28% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 4.9% per year. So it's pretty clear that eHealth is forecast to grow substantially faster than its industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for eHealth. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. With a serious cut to next year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of eHealth.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with eHealth, including concerns around earnings quality. Learn more, and discover the 2 other risks we've identified, for free on our platform here.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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