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Shares Of EHealth Fall After Downgrade On Spending

NEW YORK (AP) ¿ Shares of eHealth Inc. declined Friday following a downgrade from a Merriman Curhan Ford analyst, who said eHealth's profits are threatened by the large amounts the company has to spend to gain new customers.

Richard Fetyko downgraded the online marketer of health insurance plans to "Neutral" from "Buy." He said eHealth's customer acquisition costs ¿ the amount of money the company spends to win customers ¿ may continue to rise as the company tries to win over clients during a difficult economic period.

"We hoped that customer acquisition costs would stabilize, but we do not get the sense that it did," he said. Fetyko raised his estimates for customer acquisition costs, and he expects smaller profits as a result.

He now expects eHealth to earn 66 cents per share in 2009 and in 2010. Fetyko had expected 69 cents per share this year, and 78 cents per share next year. By comparison, Thomson Reuters says analysts are forecasting a profit of 57 cents per share in 2009, and 67 cents per share in 2010.

In afternoon trading, shares of the Mountain View, Calif., company fell 26 cents, or 1.8 percent, to $14.07.

Copyright 2009 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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