Clover Health (NASDAQ: CLOV) is facing a few legislative issues that could significantly impact its investors further down the road.
In the midst of the Medicare expansion budget plan presently being reviewed, the consumer cost-cutting company closed -4.54% lower on Tuesday and -13.12% lower in the previous month.
In point of fact, CLOV is currently trading near the bottom of its 52-week range, not a great sign, especially when the S&P 500 Index is nearing new 52-week highs at the moment. Moreover, there has been a significant decrease in volume in the last few days as both the short-term and long-term trends appear neutral.
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Strictly speaking, CLOV has been trading in a fairly wide range in the last month, trading from $7.67 to $9.45. It is currently trading in the middle of this range, suggesting traders may find some resistance above.
Wall Street analysts estimate
According to four Wall Street analysts’ 12-month price forecasts for Clover Health investments over the last three months, the average price target is $9.50, with a high estimate of $10 and a low estimate of $9 expected. The average price prediction represents a 12.96% increase over the previous price of $8.51.
Furthermore, based on the price projections of four TipRanks experts’ stock recommendations for CLOV over the previous three months, one recommends ‘Buy,’ one advises ‘Hold,’ and two suggest ‘Sell.’ The consensus rating for CLOV stock is ‘Hold,’ with a 12.96% upside, based on their recommendations.
If the legislation passes
By way of explanation, the firm offers lower-cost Medicare Advantage plans; however, with the budget proposal currently being debated in Congress, the government would expand Medicare coverage to include vision care, hearing care, and dental benefits.
On this note, If the bill is enacted, consumers will no longer have a strong incentive to register for the company’s Advantage plans because some of the optional coverage will be considerably reduced or even free.
On the other side of the coin, if the budget maintains lowering the Medicare eligibility age to 60. Clover’s top line would benefit significantly from this since their total addressable market would be increased considerably. Younger people also have fewer health problems, making them less expensive to cover, allowing for bigger profit margins.
Although upcoming legislation has created some uncertainty for Clover, there are still many reasons to be optimistic about its future.
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