Clover Health stock price could jump by 54% if this happens

on Aug 24, 2023
  • Clover Health share price has pulled back in the past few days.
  • The company reported better-than-expected financial results.
  • Its key challenge is the Medical Cost Ratio (MCR) is lower than average.

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Clover Health (NASDAQ: CLOV) stock price has pulled back in the past few days as the recent uptrend eased. The shares were trading at $1.30 on Thursday, lower than this month’s high of $1.63. They remain about 88% from the lowest level this year.

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Facing numerous headwinds

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Clover Health, a company that offers medicare advantage services, is going through headwinds as evidenced by its Q2 results. The report showed that its second-quarter revenue dropped by 67% YoY to $194 million. While this was a steep decline, the company’s revenue were better than what analysts were expecting.

Clover Health reported its first EBITDA profit as a public company. It jumped to $10 million, helped by SG&R cost cuts. Its insurance MCR jumped to 77.2% while its non-insurance MCR business plunged by 67% to $194 million. 

Clover Health has a strong balance sheet, with cash and investments of over $690 million. It also boosted its full-year revenue guidance for the insurance business. It sees the business bringing in between $1.2 billion and $1.23 billion. Its non-insurance revenue guidance remained between $750 million and $800 million.

Clover Health is facing numrous headwinds. As noted, its non-insurance business is moving in reverse, which is affecting its growth. At the same time, while its MCR has improved to 77%, it remains below the industry average of between 80% and 85%. The management had guided that its MCR will be between 87% and 89%.

The MCR issue is an important one since the Affordable Care Act (ACA) has mandated the Medical Cost Ratio (MCR) to remain above 80%. In its most recent results, the company guided that the MCR will be between 83% and 85%.

On a positive side, Clover Assistant is helping the company improve its outcomes and revenue. The CEO said:

“Clover Assistant continues to be a clear value driver in our wide primary care network, contributing well over 1,000 basis points of MCR improvement for returning members whose PCPs use Clover Assistant as compared to those who do not.”

Clover Health stock price forecast

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The daily chart shows that the CLOV stock price has been in a strong bullish trend in the past few month. This rebound has faded in the past few days. It has moved slightly below the 23.6% Fibonacci Retracement level. The shares have also moved above the 50-day moving average and the key support at $1.10 (May 18 high).

The outlook for the stock is bullish, with the next level to watch being the psychological level at $2. This target is about 54% above the current level and will be confirmed if it moves above the year-to-date high of $1.63.


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