Health Insurance Innovations (Nasdaq: HIIQ) – is a broker of health insurance plans for individuals and families. The cloud-based platform offers clients short-term plans as well as traditional plans, and it allows the insured to pick and choose between different coverage and deductible levels. The company is headquartered in Tampa, Florida and was founded in 2008.
HIIQ has experienced tremendous earnings and sales growth in recent years. The EPS have increased by an average of 187% per year over the last three years and they increased by 33% in the most recent quarterly report. Analysts expect earnings to grow by 50% for 2018 as a whole. The company will report Q4 2018 results on February 26.
Sales were up 17% in the third quarter and analysts expect them to increase by 22% in the fourth quarter results.
HIIQ has really strong management efficiency and profitability measures.
The return on equity is at 41.1% and the return on assets is at 11.2%.
The profit margin is at 17.5% and the operating margin is at 10.8%.
Another positive factor is that the company doesn’t have any long-term debt.
Analysts and investors are indifferent or bearish toward the stock it would seem. There are only seven analysts following the stock at this time. Six of the seven do rate the stock as a “buy” and one ranks it as a “hold”. I am surprised that so few analysts are following the stock and that leaves plenty of room for additional coverage.
The short interest ratio is at 9.79 and that is a sign of bearish sentiment. If the stock continues to rise, the short sellers will add buying pressure as they will have to cover their short positions.
Looking at the weekly chart, we see that HIIQ experienced a tremendous run from the fourth quarter of 2016 through the third quarter of 2018. The stock rallied from the $5 range to an all-time high of $63.13 during this run. HIIQ fell in the fourth quarter and temporarily dipped below its 104-week moving average. It has since bounced back and has broken through several layers of resistance during the bounce.
The stock moved back above its 104-week and 52-week moving averages. It also moved back above the $35 level. That area served as resistance in 2017 and again in the first half of 2018 before finally breaking through in July. I look for the stock to continue its current rally.
Suggested strategy: Buy HIIQ with a maximum entry price of $41.50. I would set a target of at least $60 over the next 9 to 12 months (for a potential return of 50% from current prices). I would also suggest a stop at $34.50.
— Rick Pendergraft