Clover Health Investments Corp (NASDAQ: CLOV) has struggled over the past month, declining to 52 week lows of $6.31 a share (a 36.9% decline from the PIPE offering price). Despite the decline, Clover is the fastest growing Medicare Advantage insurer in the United States. The company serves more than 66,300 members all in the United States. Clover Health 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 the average 12 month price target is $10.60 a share (28% downside). Here are recent price targets investors should know about:
- Bank of America 6/10/2021 – Analyst Kevin Fischbeck downgraded the companies rating to a Underperform with a $10 price target after the release of the Q1 earnings.
- Credit Suisse Group 5/19/2021 – Analyst Jailendra Singh lowered the price target on the stock to $9 valuation. The analyst noted to investors earlier this year that 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 5/18/2021 – Analyst Ralph Giacobbe lowered the firms price target from to $10 a share. CitiGroup maintained their Buy rating on the stock.
- 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 conservative with 3 Hold ratings and 2 Buy recommendations. With the average target at $10.60 a share, the market sentiment has outperformed analysts expectations with the current price at $14.66 a share. Looking ahead, a strong Q2 performance alongside investor backing may see institutions shift to a more bullish outlook.
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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. In the first quarter of this year, the company reported $200.3 Million in revenue, a 21% improvement YOY. Clover also reported a healthy cash position of $720.1 Million as a result of the merger.
However, the companies net loss widened by 261% YOY in Q1 which did impact the share price significantly. Clover initially predicted an annual EBITDA net loss between $150 Million – $190 Million for 2021, however in the most recent guidance the company expects this to possibly widen to $240 Million. Investors and institutions did not respond well to this notice, which was a factor in the downtrend of the stock.
“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 $819 Million. This represents a 22% improvement in revenue from the fiscal year of 2020. Looking 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.
Summarising CLOV’s stock forecast
In conclusion, the current trading price of Clover Health has outperformed the current analysts expectations. 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. A widening net loss has impacted the share price so far in 2021. Therefore, all eyes will be on the Q2 earnings guidance to determine if the net loss can be improved. 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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