EHealth Rallies, Analyst Sees Low Risk After 80% Drop

EHealth, Inc. EHTH gained more than 11 percent Friday after an analyst said its recent downsizing will boost earnings.

The Internet health insurance company's shares changed hands recently at $10.26, up 10.4 percent.

But even with the share price bump, eHealth is off 80 percent since the company cut its outlook in January.

FBR's Steven Halper on Friday upgraded eHealth to Outperform, from Market Perform, citing the company's plan unveiled earlier this week to slash its work force by 15 percent.

Halper, who raised his price target 40 percent to $14, estimated the savings from the downsizing at $20 million annually.

The lower costs will increase 2015 earnings by $0.03 to $0.40 a share, Halper said.

The company has been hurt by competition from state and federal health insurance exchanges set up under Obamacare, according to Halper.

On Wednesday, the company said it will focus more heavily on its Medicare-related business and de-emphasize the individual and family plan market where it has experienced the most pain.

"The shares are essentially washed out," Halper said, "and the downside risk is minimal."