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Clover Health Downgraded to Underweight by JPMorgan

Clover Health lowered most guidance metrics, a JPMorgan analyst says as she downgrades the company.

Clover Health Investments  (CLOV) - Get Report was downgraded to underweight from neutral Monday by a JPMorgan analyst after the Medicare insurance startup and recent meme-stock favorite lowered most of its guidance metrics.

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Shares of the Franklin, Tenn., company were up 6% to $9.83 at last check and have been down 42.6% year-to-date.

Analyst Lisa Gill, who also cut her price target to $9 from $15, said in a research note that following first-quarter results, Clover Health "lowered most guidance metrics, including reducing the number of aligned beneficiaries under the direct contracting program in 2021 by 50%."

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Clover Health went public via venture capitalist Chamath Palihapitiya’s SPAC.

"CLOV aims to use its proprietary Clover Assistant point-of-care physician clinical management software to simultaneously deliver superior member benefits and industry-leading profitability," Gill said. "Whether this 'thesis' can prevail will face an extreme test as CLOV expands exponentially."

The analyst thinks "shares of other managed care companies offer a more balanced risk/reward profile with little visibility into near-term risks such as a rebound in post-pandemic medical utilization, pause in the direct contracting program and uncertainty into aligned beneficiary growth in 2H21 and 2022."

Last month, Clover Health surged after meme stock investors rallied around the healthcare plan company. 

Bank of America analyst Kevin Fischbeck cut his rating on Clover Health in June to underperform from neutral, saying the health insurance stock’s valuation was “no longer supported by fundamentals.”

Fischbeck cited the company's mixed first quarter earnings, which showed revenue rising 21% to $200.3 million but its medical loss ratio - the percentage of premiums spend on claims and expenses - jumping to 108%.