On a technical basis, EBIX, Inc. shares have exited a several year trading range and now look compelling.

1. Dvorak Technical Research, Inc. Recommendation 2-14-2013 Short Term / Long Term Rating
Ebix, Inc. (EBIX) Adding to Smallcap Watch List
“Insurance Industry IT Services Provider Moves to “Buy’ Territory after Several Years in Trading Limbo”
Symbol EBIX
Recent Price: $18.19
52 week range $26.90 - $15.26
Shares outstanding 37.3.M
Short Position 13.0 M
Ave. daily volume 0.450M
Market Cap $677 M
Revenue TTM $189M
Yield 1.6%
EBIX is a leading international supplier of on-demand
software and E-commerce services to the insurance
industry. EBIX was a strong performing stock up until
2009 and has since been stuck in a trading range between
the mid-teens and high twenties. The chart has been
negative in recent years, but recently things appear to be
changing to the good. EBIX Q3 results showed good
growth in revenue while cash flow and EPS remain solid.
A shrinking relative valuation the past few years, combined
with a recent 50% dividend increase, a huge short interest
(13M shares) and EBIX looks ready to go.
Short term: The daily EBIX chart shows a fresh breakout
at $17.05. This new move has a short-term target of
$19.00. More important than the base, however, is the
trading range the past three years, the high end of which is
$23.50 to $26.50. In our view EBIX is likely to trade to the
upper end of this range. Given its strong chart and short-term breakout after a few years of lackluster performance, this is a great time to look at EBIX
carefully. Stocks tend to consolidate major advances for many months or years while the fundamentals catch up to the stock price.
Long term:
EBIX’s longer-term chart shows a large trading range between $15 and $26. This has created a three-year base that is likely to propel EBIX higher later
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2. this year. A reversal is expected, where a continued advance through $23.50 could launch EBIX to new highs and a new bull run. Beyond its technical,
EBIX has four catalysts that can propel the stock higher: 1) EBIX is trading at a modest valuation: during the last three years the business has grown 50%
where the stock has drifted sideways or down. 2) EBIX has a very large short interest representing 34% of total shares and 31.7 days average volume
which represents substantial future demand as the share price rises. 3) Recent sales and earnings and sales growth have improved somewhat, and 4) a
recent 50% increase in the dividend now provides a 1.6% yield. Given these factors and a longer-term view that can improve from here, it seems quite
likely the stock will extend its initial breakout in the coming months. When a stock enters into a new price range it signals renewed interest in the stock
caused by better fundamentals, the numbers of sellers is diminished as fewer investors have a losing position and short sellers are more likely to consider
taking profits. Accordingly, now is a great time to look at EBIX as the new short-term strength may propel the stock into a renewed bull move
turbocharged by short covering and provide above market long-term performance.
CHARTING THE COURSE
The Right Market Insights
at the Right Time
Dvorak Technical Research has a proven track record
of above-average investment results using a unique
combination of fundamental and technical analysis.
Chris Dvorak, President, started his investment career
in Minneapolis at Piper Jaffray and then spent nearly
20 years at Perkins Capital Management. Over his
career Chris has conducted extensive, in-depth
analysis of daily, weekly, monthly and long-term
stock charts of thousands of companies to
successfully identify and anticipate short- and long-
term opportunities. While many investors understand
the “what? and Why?” of an attractive investment,
Dvorak Research improves investment performance
and mitigates risk by answering the question “when?”
for any stock or portfolio.
Christopher Dvorak, President
Dvorak Technical Research, Inc. 612-424-7404
cdvorak@dvorakresearch.com
@technician SeekingAlpha, StockTwits & Twitter
Disclaimer: All the reports and content are for educational purposes only and do not constitute trading advice nor an invitation to buy or sell securities. The views are the personal views
of the author. Before acting on any of the ideas expressed, the reader should seek professional advice to determine investment suitability in view of his or her personal circumstances.
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