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

Stock MarketsJul 07, 2021 01:30PM ET
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© Reuters. Clover vs. Humana: Which Healthcare Plan Stock is a Better Buy?

As the Affordable Care Act (ACA) seeks to lower health care costs and expand health care coverage, health insurers have been offering favorable premium options and deals with healthcare providers to capitalize on growing ACA enrollment. This backdrop is expected to benefit Humana (HUM) and Clover Health (CLOV). But let’s find out which of these stocks is a better buy now. Humana Inc . (NYSE:HUM), in Louisville, Ky. and Franklin, Tenn.-based Clover Health Investments, Corp. (CLOV) are two prominent players in the health insurance industry. HUM offers commercial fully insured medical and specialty health insurance benefits, coordinated health care through health maintenance organizations (HMO), and administrative services products. Whereas CLOV, through its Clover Assistant software platform, provides Preferred Provider Organization (PPO) and HMO health plans to Medicare-eligible consumers.

Designed to lower health care costs and extend health coverage to millions of uninsured Americans, the Affordable Care Act has increased competition among insurers significantly on premium price and value. Since the COVID-19 pandemic, health insurers have been upgrading their policies with various premium options, favorable reimbursement rates, adding coverage of various diseases, and making long-term contracts with healthcare providers to capitalize on ACA’s rising enrollment. Consequently, the global health insurance market is expected to grow at 5.5% CAGR to hit $3.04 trillion by 2028. So, we believe both HUM and CLOV should benefit substantially in the coming months.

While CLOV gained 11.1% over the past month, HUM has returned 6.4%. And in terms of their past three month’s performance, CLOV is again the clear winner with 31.4% gains versus HUM’s 11.4% returns. But CLOV’s rally can be attributed in large measure to the meme stock craze. So, which of these stocks is a better pick now? Let’s find out.

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

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