Clover vs. Centene: Which Healthcare Plan Stock is a Better Buy?

: CLOV | Clover Health Investments Corp. Cl A News, Ratings, and Charts

CLOV – Clover (CLOV) and Centene (CNC) are two companies that offer healthcare plans to customers. CLOV has been in the headlines due to its high-profile investors, while CNC is lesser-known. Patrick Ryan explains why CNC is the better buy.

The healthcare sector has been a long-term outperformer as the healthcare sector takes an increasing share of the economy. This is due to costs rising faster than the pace of inflation as well as demand increases due to the aging population.
Further, the improving labor market is another catalyst as it tends to mean more customers. However, there’s considerable competition in the space especially as new healthcare tech companies are attempting to disrupt the space by offering services and products that threaten the legacy companies.
Let’s take a look at two healthcare plan stocks that are worthy of investors’ attention: Clover (CLOV) and Centene (CNC).

Clover (CLOV)

CLOV is a healthcare tech business. CLOV’s proprietary tech platform gathers, structures, and studies data about health and behavior. The overarching outcome of this effort is to enhance medical results while simultaneously reducing the cost of healthcare.

CLOV has a D POWR Rating grade. The stock has an F Sentiment grade along with Ds in the Quality, Stability, and Growth components. Prospective investors can learn more about how CLOV grades out in the Momentum and Value components of the POWR Ratings by clicking here.

Of the 11 stocks in the Medical – Health Insurance industry, CLOV is ranked dead last at 11th. Click here to learn more about the stocks traded in this space.

CLOV is currently trading at $6.85 per share. The stock’s 52-week high is $17.45. CLOV’s 52-week low is $6.31. In other words, CLOV’s current price might be an opportunistic entry point.

Three analysts have studied CLOV in-depth. The average target price for the stock is $12.67, meaning CLOV has an 85% upside. The highest target price for the stock is $15. The analysts’ lowest target price for CLOV is $10. Exactly four analysts have issued CLOV recommendations with two viewing it as a Strong Buy and two viewings it as a Hold.

Centene (CNC)

CNC is a multinational healthcare business. CNC’s value offering is services provided to healthcare programs sponsored by the federal government. CNC’s services are tailored to those who are uninsured and underinsured. CNC also provides outreach and educational programs to help clients obtain the best possible healthcare.

All in all, CNC is a $100 billion+ business with 24 million members spread across the entirety of the United States. In fact, CNC’s purchase of WellCare Health made it the country’s largest Medicaid managed care organization.

CNC is currently trading at $70.56. The stock’s forward P/E ratio is 13.58, meaning there is an argument to be made that it is currently undervalued. CNC is trading a couple of dollars below its 52-week high of $72.31 so the low forward P/E should whet your appetite all the more. CNC’s 52-week low is $53.60.

CNC is also attractive as it has a low beta of 0.48. This means if the market becomes a rollercoaster, CNC is likely to remain around its current price point rather than falling off a cliff as could potentially occur with comparably volatile stocks.

CNC has a B POWR Rating grade along with an A Value component grade and Cs in the Growth and Momentum components. Click here to find out how CNC grades out in the Quality, Sentiment, and Stability components of the POWR Ratings.

Of the 11 publicly traded companies in the Medical – Health Insurance space, CNC is ranked 6th. The Medical – Health Insurance sector as a whole has a B POWR Rating grade. Click here to find out more about this industry.

The analysts are bullish on CNC, establishing an average target price of $78.97 for the stock. This means CNC has a 16% upside. The high target price for the stock is $102 while the low target price is $65. Of the 18 analysts who have issued recommendations for CNC, five view it as a Strong Buy, eight views it as a Buy, and five view it as a Hold.

Which is the Better Buy?

The choice is clear. CNC has a B POWR rating while CLOV has a D POWR Rating grade. Investors should have no qualms adding CNC to their portfolio.


CLOV shares were trading at $7.09 per share on Friday morning, down $0.04 (-0.56%). Year-to-date, CLOV has declined -57.72%, versus a 12.07% rise in the benchmark S&P 500 index during the same period.


About the Author: Patrick Ryan


Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
CLOVGet RatingGet RatingGet Rating
CNCGet RatingGet RatingGet Rating

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