Stock to Watch: Analysts See Incredible Growth Potential in Digital Healthcare

Health Insurance Innovations (NASDAQ: HIIQ) is a market-leading developer of affordable and innovative health insurance plans that are web-based and positioned to capitalize on the industry’s long-term expectations for growth in the realm of digital healthcare.  Rising trends in these emerging areas of the market meet all of the criteria as a top stock sector to watch in 2019, and stock opportunities for investors can be found here in coming quarters.

photo/ Gerd Altmann

According to expectations on Wall Street, Health Insurance Innovations is a company with substantial potential for growth in an industry framework with strongly bullish tailwinds. Cantor Fitzgerald analyst Steven Halper has said: “We believe that HIIQ is well-positioned to benefit from increasing demand for short-term medical products. We expect top-line growth of 24% in 2019 and 3-15% annual top-line growth for the rest of our explicit forecast.”  Mr. Halper also added: “HIIQ shares remain inexpensive, in our opinion, as they trade below our DCF-based price target of $75.” 

Comparing this price forecast to the company’s current market valuation, this translate to potential upside of more than 187%.  Steven Halper ranks at number 129 on a list of over 5,000 stock analysts, so these are forecasts that should not be taken lightly by investors.  In his report on Health Insurance Innovations, Mr. Halper also explains that “concerns regarding HIIQ’s exposure to FTC lawsuit against Simple Health are entirely overblown.”  

These comments were made in reference to legal disputes between the Federal Trade Commission (FTC) and former distributor Simple Health.  However, disclosures that have been released recently show that Health Insurance Innovations is not a defendant in the case and that the company is actively engaged in a cooperative dialogue with the Federal Trade Commission in the matter.  In sum, Halper explains that the disclosure “should put to bed any lingering concerns regarding HIIQ’s exposure to Simple Health.” 

Other experts agree, as Randy Binner (of equity analyst firm Raymond James) has said that a final resolution of the matter and the complete dissociation between HIIQ and former distributor Simple Health will likely be positive for share prices.  Currently, Health Insurance Innovations has a “buy” rating from seven different Wall Street analysts and this makes HIIQ one of the market’s best growth stock opportunities this year.  Amongst this group of industry experts, the average price target for the stock stands near $65 per share (implying a potential upside of 160% for the stock).

HIIQ: Recent Earnings Results

Last quarter, Health Insurance Innovations reported earnings of $0.31 per share on revenues of $87.33 million.  The top line figure surpassed analyst estimates calling for revenues of $83.58 million for the period. Net margins posted at 3.48%, while the company’s return on equity came in at an impressive 28.56%.  Revenue growth came in at 15% on an annualized basis and analysts expect Health Insurance Innovations to produce earnings of $3.29 per share for the current fiscal year.

Hedge Funds Have Never Been This Bullish

Heading into the second quarter of 2019, hedge fund activity in HIIQ indicates bullish changes of 22% on a quarterly basis:

chart courtesy of APEX Research

Data reports show that the largest hedge fund position in HIIQ is held by Hunt Lane Capital, which has exposure in the stock of roughly $24.1 million (or 3.3% of its portfolio).  The second largest hedge fund position in HIIQ is held by Cannell Capital, which holds a position in the stock worth $23.8 million (or 5.8% of its portfolio). Other hedge funds and institutional investors with substantial positions in HIIQ include Cardinal Capital, P2 Capital Partners, and Millennium Management.

As a point of comparison, we can rate this hedge fund activity against other companies with a similar market capitalization: ImmunoGen, Inc. (NASDAQ:IMGN), Ultra Clean Holdings Inc (NASDAQ:UCTT), Century Bancorp, Inc. (NASDAQ:CNBKA), and AudioCodes Ltd. (NASDAQ:AUDC).  This grouping of stocks shows an average hedge fund investment of $37 million. IMGN holds the highest number of bullish hedge fund positions, while CNBKA has the lowest number of bullish hedge fund positions.  

However, these investment figures pale in comparison to the hedge fund investments of $154 million that have been directed at HIIQ and its strong position in the digital healthcare industry.  Thus, amongst stocks with similar market capitalization, Health Insurance Innovations is far more popular with hedge funds.  As a market leading cloud-based technology platform and distributor of innovative health insurance products, the company is able to meet consumer needs in an affordable and efficient manner.  Health Insurance Innovations assists in the development of insurance products, through relationships with best-in-class insurance companies. The company provides access to these products through a broad distribution network of third-party licensed insurance agents across with a mission to be the premier developer/distributor of targeted, specialized insurance products and services. Guided by experience, research, and innovative technology, HIIQ stands tall as one of the market’s best growth stock picks of the year.

Author: APEX Research