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NEW YORK (AP) — Shares of Health Insurance Innovations Inc. rose Monday after a Citi Investment Research analyst started covering the company with a "Buy" rating.
THE SPARK: "Health Insurance Innovations has the potential to be among the fastest growing health care services stocks over the next three years," analyst Carl McDonald said in a note to clients. He said the company, which recently went public, is working to inform more consumers and insurance brokerages about its service, and while revenue and awareness are low right now, the company's growth has been impressive.
McDonald set a price target of $18 on shares of the Tampa, Fla., company.
THE BIG PICTURE: Health Insurance Innovations offers web-based medical insurance plans for the uninsured and underinsured. It offers six- and 12-month insurance plans and other services like hospital indemnity plans, pharmacy benefit cards, dental and vision plans, and cancer and critical illness plans. It says consumers can use its website to get prices and tailor their choices to meet their needs, buy policies and print documents and ID cards in real time.
Over the first three quarters of 2012 the company's revenue rose 38 percent to $30.1 million.
McDonald said health care reform may end up helping sales of short-term medical insurance. Short-term plans don't cover pre-existing conditions, which means a policy holder who is diagnosed with a disease would not be able to buy a plan that covers that disease after his or her current plan runs out. However the 2010 health care reform law will prevent health insurance plans from rejecting consumers based on pre-existing conditions starting in 2014.
That means a consumer in that situation could just buy insurance from a health insurance exchange starting in 2014, McDonald said.
SHARE ACTION: Shares of Health Insurance Innovations rose 44 cents, or 3.5 percent, to $12.94 in afternoon trading. The company's initial public offering of 4.7 million shares priced at $14 a share on Feb. 8. That was at the low end of its expectations, and shares have declined since then.