eHealth (EHTH) has been on a downward spiral currently with vital promoting stress. After declining 26.4% over the previous 4 weeks, the inventory seems to be nicely positioned for a development reversal as it’s now in oversold territory and there’s robust settlement amongst Wall Road analysts that the corporate will report higher earnings than they predicted earlier.
Information to Figuring out Oversold Shares
We use Relative Power Index (RSI), probably the most generally used technical indicators, for recognizing whether or not a inventory is oversold. It is a momentum oscillator that measures the velocity and alter of worth actions.
RSI oscillates between zero and 100. Often, a inventory is taken into account oversold when its RSI studying falls under 30.
Technically, each inventory oscillates between being overbought and oversold no matter the standard of their fundamentals. And the fantastic thing about RSI is that it helps you rapidly and simply test if a inventory’s worth is reaching a degree of reversal.
So, by this measure, if a inventory has gotten too far under its truthful worth simply due to unwarranted promoting stress, buyers might begin in search of entry alternatives within the inventory for benefitting from the inevitable rebound.
Nevertheless, like each investing device, RSI has its limitations, and shouldn’t be used alone for investing determination.
Why EHTH May Bounce Again Earlier than Lengthy
The RSI studying of 23.58 for EHTH is a sign that the heavy promoting may very well be within the strategy of exhausting itself, so the inventory might bounce again in a quest for reaching the outdated equilibrium of provide and demand.
The RSI worth is just not the one issue that signifies a possible turnaround for the inventory within the close to time period. On the basic facet, there was robust settlement among the many sell-side analysts masking the inventory in elevating earnings estimates for the present 12 months. During the last 30 days, the consensus EPS estimate for EHTH has elevated 142.5%. And an upward development in earnings estimate revisions often interprets into worth appreciation within the close to time period.
Furthermore, EHTH presently has a Zacks Rank #2 (Purchase), which implies it’s within the prime 20% of greater than the 4,000 shares that we rank based mostly on developments in earnings estimate revisions and EPS surprises. It is a extra conclusive indication of the inventory’s potential turnaround within the close to time period. You possibly can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here >>>>
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eHealth, Inc. (EHTH) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the writer and don’t essentially replicate these of Nasdaq, Inc.
