Clover vs. Teladoc: Which Healthcare Stock Is a Better Buy?

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

CLOV – The healthcare sector is considered an industry that enjoys the benefits of inelastic demand and a near immune to economic challenges because people typically prioritize spending in this area. Clover Health (CLOV) and Teladoc (TDOC) are two companies in the sector that are gaining in popularity among investors based on their market positions and growth expectations. So, let’s take a closer look at these two names to evaluate which is the better bet now. Read on.

Investing in the stock market facilitates exposure to companies across sectors. One can add disruptive tech stocks to a portfolio or buy shares of companies that are part of emerging sectors, such as electric vehicles (EVs).

However, if one is seeking investments in stocks that have low volatility, one needs  to identify companies that are recession-proof and can perform well across business cycles.

The healthcare space is considered an industry that is immune to economic challenges because  people typically  prioritize spending in this area. So, here  we look at two healthcare stocks–Clover Health (CLOV) and Teladoc (TDOC)–that are gaining  in popularity among investors to analyze which is currently the  better buy.

Click here to checkout our Healthcare Sector Report for 2021

Clover Health stock is down 49% from record highs

Backed by noted investor Chamath Palihapitiya, Clover Health went public earlier this year via an  SPAC.. However, the stock is currently trading 49% below its all-time high,  which should make it  attractive to contrarian investors given its enviable growth rates.

Clover Health operates as a Medicare Advantage Insurer in the U.S. and competes with giants CVS Health, Anthem, and United Healthcare. this space. In fact, the big four insurance players in the U.S. account for 70% of Medicare enrollees.

Clover Health stock has been pummeled in the wake of  a Hindenburg Research report that accused the company  of misleading investors. Apparently, Clover failed to disclose DoJ (Department of Justice) inquiries to shareholders before it went public. The report also disparaged Clover Assistant, its software platform for physicians, and outlined several other discrepancies associated with the company.

Nevertheless, Clover is forecast to grow its revenue at a fast clip and the current stock price retreat  provides investors with a buying opportunity. In 2020, Clover Health reported  $673 million in sales, a rise of 45.6% year over year. Its gross profits were up 12.2% year over year at  $82.4 million, but the company also reported a $91.6 million net loss.

Palihapitiya is optimistic that Clover will turn profitable by the end of 2023. However, the company’s management expects its net loss to widen to between $170 million -$210 million in 2021.

Wall Street analysts that cover the company expect its sales to rise by 22% to $822.58 million, which suggests the stock is valued at a 4x forward price to sales multiple, which is reasonable considering its growth estimates.

Teladoc has underperformed the markets in 2021

Another healthcare stock that is under the gun  is Teladoc. Shares of this health-tech company are down 51% from record highs. Year-to-date, TDOC stock has lost 28.3% compared to the S&P 500’s  11.1% return.

However, we think Teladoc is a solid long-term bet given its rapidly expanding market, which is forecast to hit $250 billion annually in a post-pandemic market. Analysts forecast Teladoc sales to reach $2 billion in 2021, giving the company sufficient  opportunity to expand its top line in 2021 and beyond. While Teladoc is currently unprofitable, Wall Street has forecast its profit margins to improve from a $5.36 loss per share  in 2020 to a $1.02 loss per share in 2021.

In Q1, Teladoc reported $453.7 million in revenue, up 151% year over year, compared to consensus estimates of $451.9 million. Its adjusted net loss stood at $29.6 million or $0.40 per share compared to estimates of a net loss of $0.59 per share. Teladoc managed to improve its EBITDA significantly to $56.6 million in Q1, up from just $10.7 million in the prior-year period.

The final takeaway

Analysts are bullish on both stocks. They expect Teladoc shares to rise by 60% in the next 12-months, while Clover Health shares might gain 56% in this period.  Teladoc stock is trading at a higher price to sales multiple of 11x compared to Clover Health.

However, we think Teladoc’s leadership position in the telehealth market in the U.S. as well as solid growth forecasts and a massive market makes it a better bet. This is  especially the case given that Clover Health is competing with established giants and grappling with regulatory issues.

Click here to checkout our Healthcare Sector Report for 2021


CLOV shares were trading at $7.78 per share on Wednesday morning, down $0.35 (-4.31%). Year-to-date, CLOV has declined -53.61%, versus a 9.46% rise in the benchmark S&P 500 index during the same period.


About the Author: Aditya Raghunath


Aditya Raghunath is a financial journalist who writes about business, public equities, and personal finance. His work has been published on several digital platforms in the U.S. and Canada, including The Motley Fool, Finscreener, and Market Realist. More...


More Resources for the Stocks in this Article

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

Most Popular Stories on StockNews.com


:  |  News, Ratings, and Charts

Should Investors Fear Inflation?

The S&P 500 (SPY) has been relatively flat this week. Covid is fading away. The economy is improving. Thus, the only investment story worthy of debate is inflation. So let that be our focus today. Read on below to find out more…

:  |  News, Ratings, and Charts

3 Housing Stocks to Buy on the Dip

Housing has been one of the strongest parts of the economy over the past year. However, the sector has experienced some profit-taking over the past month, setting up a buying opportunity. 3 housing-related stocks to consider buying on the dip are Hovnanian Enterprises (HOV), Tempur Sealy International (TPX), and Industrie Natuzzi (NTZ).

:  |  News, Ratings, and Charts

2nd Half of 2021 Stock Market Outlook

The stock market (SPY) has continued on a bullish path to start 2021. Yet it is not quite the same glorious bull run we enjoyed from the lows of last year. This market has become more volatile and with less upside potential. However, there is still plenty of money to be made if you look in the right places. That is the very nature of the new presentation I put together. So read on for more info…

:  |  News, Ratings, and Charts

Buy These 4 Undervalued Growth Stocks Before It’s Too Late

With the global economy recovering fast, this may be the ideal time to invest in quality growth stocks that are still trading at reasonable valuations. Daimler (DDAIF), Regeneron (REGN), POSCO (PKX), and Covestro (COVTY) are examples of names that possess solid growth attributes and are trading at valuations that are lower than their peers. So, we think it could be wise to scoop up their shares before their prices rise to justified levels. Read on.

:  |  News, Ratings, and Charts

2nd Half of 2021 Stock Market Outlook

The stock market (SPY) has continued on a bullish path to start 2021. Yet it is not quite the same glorious bull run we enjoyed from the lows of last year. This market has become more volatile and with less upside potential. However, there is still plenty of money to be made if you look in the right places. That is the very nature of the new presentation I put together. So read on for more info…

Read More Stories

More Clover Health Investments Corp. Cl A (CLOV) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All CLOV News