By Dhirendra Tripathi
Investing.com – Meme stock Clover Health (NASDAQ:CLOV) fell more than 3% in Monday’s trading after JPMorgan (NYSE:JPM) analyst Lisa Gill cut her price target to $9 due to a “less compelling” risk-reward ratio.
The weakness in shares took it below Gill’s latest target.
Clover lowered most guidance metrics, including reducing the number of aligned beneficiaries under the direct contracting program in 2021 by 50%, Gill wrote in her note.
The analyst thinks shares of larger, more diversified rivals in the managed care business offer a better balance of risk-rewards, given Clover's reduced visibility into near-term risks. These include a rebound in post-pandemic medical utilization, uncertainty in aligned beneficiary growth and a pause in the direct contracting program.
For fiscal 2021, Clover expects total revenue to be between $810 million and $830 million, inclusive of a preliminary estimate of approximately $20 million to $30 million of revenue generated from direct contracting.
A normalized adjusted loss in earnings before interest, taxes, depreciation and amortization is seen between $240 million and $190 million. The company will disclose its second quarter earnings on August 11.