SunTrust 'comfortable' with eHealth accounting, says buy on selloff

SunTrust Robinson Humphrey analyst Tobey Sommer believes "aggressively" accumulating eHealth shares below $100 following the "rehashing of investor concerns" over constrained lifetime values will be viewed as "very attractive" over the next 12 months. The stock, following a short report from Carson Block's Muddy Waters, is down 15% to $99.35 in morning trading. The accounting issues regarding the company's transition to ASC 606 raised by Muddy Waters are familiar to most investors, Sommer tells investors in a research note. The analyst recommends using today's selloff as a buying opportunity and reiterates a Buy rating on eHealth with a $250 price target. The company's path to "rapid and profitable" growth has been made easier by discovering call center agents can work remotely, contends Sommer, who is "comfortable" with eHealth's accounting. The analyst thinks eHealth can see 50%-plus growth over the next several years. The company is capable of transitioning to a virtual internal work environment while other Medicare Advantage players may be challenged, Sommer writes.