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eHealthInsurance (NASDAQ:EHTH) is scheduled to report its fourth quarter 2008 results after the market closes on Thursday, February 12. Based on our analysis, we are expecting EHTH to report inline results that meet Wall Street's expectations.

Analyst Expectations

We are forecasting revenues of $29.3 million and EPS of $.12. This would represent a 21% growth in revenues from last year's $24.2 million in the same period. The current analyst consensus calls for revenues of $29.5 million and $.12 EPS. On October 30, the company reiterated its full year revenue guidance which would imply fourth quarter revenues of $29.2 – 31.2 million.

While the overall economy is certainly struggling with declining consumer spending, we believe that most consumers do not consider health insurance to be a discretionary item. We anticipate that EHTH will benefit even in this poor economic environment as consumers become more diligent in looking at ways to reduce expenses.

Our checks show that traffic growth continues to be strong for ehealthinsurance.com. We would expect that EHTH may see some lift to margins as declining advertising prices allow it to become more efficient with its marketing spending. Although it seems that many internet companies have ceased giving guidance for 2009, we believe that EHTH's strong revenue model should allow management good visibility into the coming months. Wall Street is currently expecting 18% growth in 2009 and we feel that is certainly achievable and would expect guidance to be in that range.

Share Performance

eHealthInsurance's shares are up 7% since the beginning of the year. In 2008, the shares took a severe beating – dropping 59% compared to the Dow Jones index's 34% drop. ValuationShares are now trading at 23x consensus 2009 EPS estimates. This is inline with the relative valuations of its peer group. We believe the market will react positively even if the company simply meets expectations. The company's market position and ability to achieve double-digit growth even in a recessionary environment should be viewed very positively by investors

Recommendation: Buy with an $18 price target.

Source: eHealth: Looking Forward to a Healthy Report Despite Ailing Economy