Clover Health Investments Corp (NASDAQ: CLOV) has seen a swift uptrend in investor sentiment over the past week. Clover is the fastest growing Medicare Advantage insurer in the United States. The company serves more than 58,000 members in 34 counties and 7 states within the United States. CLOV stock initially caught the attention of investors after SPAC Billionaire Chamath Palihapitiya announced his intentions to make the company public via a reverse merger. Now trading as a public company, we will breakdown what investors need to know about Clover Health’s stock forecast for 2022.
Table of contents
What are analysts forecasting for Clover Health stock in 2022?
Firstly, the general consensus amongst Wallstreet analysts is neutral with 2 Hold ratings. The average 12 month price target (forecast) for Clover suggests an upside of 31% from the current trading price. Here are recent price targets from analysts, investors should know about:
- Credit Suisse Group 3/15/2021 – Analyst Jailendra Singh initiated coverage on the stock with a 12 month price target of $10 a share. Credit Suisse currently have a neutral rating on the stock. The analyst noted to investors there is long term potential in the Medicare Advantage industry. However, broader market volatility in growth stocks coinciding with the concerns raised from Hindenburgs short seller report in February have caused volatility in the stock (according to TheFly report).
- CitiGroup 3/3/2021 – Analyst Ralph Giacobbe lowered the firms price target from $19 to $13 a share. The target represents a 34% upside from the current trading price. CitiGroup have shifted their original coverage which was a Buy rating.
- JP Morgan & Chase 2/1/2021 – Analyst Lisa Gill initiated a neutral coverage with a price target of $15 a share. This is currently the street high target from analysts on Wallstreet.
What this means for investors?
As we can see the general sentiment across the board of analysts is neutral. However, the steep decline in Clover’s stock price now sees price targets from all analysts suggesting an upside. We have seen this throughout the “High growth” sector, with majority of merged (SPAC) companies trading below analyst expectations.
How is Clover financially performing in 2021?
Firstly, Clover Health performed strongly in regards to revenue in 2020. The company generated $673 million, a 46% YOY improvement. The revenue growth is a bi-product of its growing membership base, up 36% YOY. The merger transaction has provided Clover with $670 Million in proceeds after net transaction expenses. However, the company is still running at a net loss of $91 million in 2020. This loss is expected widen in 2021 with Clover predicting the loss to be between $170 Million and $210 Million .
“Our 2020 results demonstrate our ability to deliver revenue and membership growth, while improving management of the cost of care for our members and driving further operating leverage.”Clover Health’s CFO, Joe Wagner on Full Year results for 2020
Looking forward at Clovers revenue growth
The revenue outlook in 2021 looks positive according to analysts, with an average revenue forecast of $822.58 Million. This represents a 22% improvement in revenue from the fiscal year of 2020. Looking further ahead, the company expects to generate $1.21 Billion in Gross Revenue for 2022 and $1.7 Billion in 2023 (according to Clover’s Investor presentation). In addition, the company expects to have over 450,000 members by 2023.
The risks associated with Clover Health stock
There is no reward without the associated risk attached. This remains true for the high growth sector of the market. As we have seen over the past 4 months, the high growth sector including merged SPAC companies tend to carry high volatility. The recent downtrend of Clover Health stock has pushed the companies stock price below its PIPE offering price of $10. As discussed by analyst Jailendra Singh, the volatility of CLOV stock has left analysts neutral (for now) on the midterm performance of the company.
In conclusion, the current trading price of Clover Health sees an upside, on average of 31% according to Wallstreet analysts (at the time of writing). In addition, the revenue forecasts remain positive which is a bi-product of the businesses growing membership base. However, the volatility of the stock has been ongoing and is definitely a factor in the midterm outlook of Clover stock. We will continue to update our viewers on Clovers performance as we move through 2021.
Written by Tyger Fitzpatrick, Founder of Youth Investment Group.
The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
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