Craig-Hallum downgrades eHealth to Hold, lowers price target to $7

As previously reported, Craig-Hallum downgraded eHealth to Hold from Buy with a price target of $7, down from $11. The firm’s checks suggested that this year’s AEP enrollment growth was below plan for the industry, and based on the large carriers’ results so far it would appear to be true. This was a function of CMS moves that challenged the advertising strategies which resulted in a smaller number of leads, fewer choices for consumers and less conversions of existing customers to new policies. Craig-Hallum is concerned that Medicare enrollments, which it had modeled to grow 33%, could come below expectations but sees tail revenues potentially benefiting results, given the firm is hearing that churn overall is coming in lower.