Should Health Insurance (HIIQ) Stock Be In Your Portfolio?

On Aug 12, Zacks Investment Research upgraded Health Insurance Innovations, Inc. (NASDAQ:HIIQ) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Health Insurance has been witnessing upward revisions in earnings estimates on the back of its strong second-quarter 2016 results and raised guidance. This life insurer reported earnings of 27 cents per share in the second quarter, with a massive positive earnings surprise of 350%. Earnings soared 237.5% year over year on solid premium equivalents. With respect to earnings surprise, the company delivered positive surprise in each of the last four quarters.

Revenues surged 95.6% year over year on higher policies in force and continued strong sales.

Health Insurance continues to boost the sales results of the individual and family finance business or IFPs, which are short-term medical and limited medical policies. The company reported 0.3 million policies in force at the end of the second quarter, up 128% year over year.

The company strengthened its balance sheet through solid operational performance. Cash balance at end of the quarter was 60% higher than the 2015-end level. Total assets also jumped 17.6% from the 2015-end level.

Agile Health Insurance (a short-term medical insurance provider), which is Health Insurance’s largest distributor, sold approximately 16,000 STM policies and a record 2,500 supplemental dental and vision policies in the quarter. The company expects Agile Health Insurance to add new products this year. This will ensure future growth prospects for the company.

Based on strong performance, Health Insurance now expects adjusted earnings per share to be between 55 cents and 65 cents and revenues in the range of $155–$165 million. This is higher than earnings of 38–42 cents per share and revenues of $138–144 million guided earlier. The new guidance accounts for a 104–141% increase in earnings and 48–58% rise in the top line.

The Zacks Consensus Estimate for 2016 moved up 46.5% to 63 cents per share as all the estimates were revised higher over the last 30 days.

Stocks to Consider

Investors interested in the life insurance industry can look for Genworth Financial, Inc. (NYSE:GNW) , Primerica, Inc. (NYSE:PRI) and Sun Life Financial Inc. (TO:SLF) . While Genworth Financial sports a Zacks Rank #1 (Strong Buy), both Primerica and Sun Life Financial hold a Zacks Rank #2 (Buy).