BofA Downgrades Clover Health After 100% Stock Surge

Clover Health Investments Corp.’s CLOV stock has spiked by around 100% over the past week and is now at a 70% premium to its closest competitor, Alignment Healthcare Inc ALHC, according to BofA Securities.

The Clover Health Investments Analyst: Kevin Fischbeck downgraded the rating for Clover Health Investments from Neutral to Underperform, while maintaining the price target at $10.

The Clover Health Investments Thesis: The recent reductions in management’s growth targets for Medicare Advantage (MA) and Direct Contracting (DC) significantly hampers visibility into the company’s prospects, Fischbeck said in the downgrade note.

“With Q4 results, the company cut its MA membership outlook for 2021 citing a slow pivot to the electronic sales channel and drop in in-person broker sales during COVID,” the analyst said.

“Previously, the company appeared confident in its DC membership outlook, but then with Q1 results, the company cut its DC membership outlook,” he added.

“To some degree, we think falling short on membership in a new government program is completely understandable given the number of moving pieces, but doing so the quarter after lowering the MA membership guide leaves us with low visibility into the outlook,” Fischbeck wrote.

CLOV Price Action: Shares of Clover Health Investments had declined by 10.82% to $15.09 at time of publication Thursday.

(Photo by Luis Villasmil on Unsplash)