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Investing.com - Barclays (LON:BARC) initiated coverage on Oscar Health Inc (NYSE:OSCR) with an Underweight rating and a $17.00 price target on Wednesday. The health insurance company, currently trading at $20.45 with a market capitalization of $5.2 billion, is showing signs of being overvalued according to InvestingPro analysis.
The rating comes after Oscar Health and new CEO Mark Bertolini outlined a path to achieve over $2.25 earnings per share by 2027 during the company’s June 2024 investor day. The plan includes 500 basis points of margin expansion, with 70 basis points from medical loss ratio improvements and 400-500 basis points from selling, general, and administrative expense reductions. The company has demonstrated strong revenue growth of 54% in the last twelve months, though InvestingPro data shows it currently trades at a relatively high P/E ratio of 35.8.
Barclays identified several emerging policy risks that could threaten Oscar’s margin and growth targets, including integrity rules, Cost-Sharing Reduction funding, pharmacy tariffs, and the expiration of enhanced subsidies.
Despite these challenges, Oscar Health shares have risen more than 50% in June, which Barclays attributes to speculative retail investor interest, creating what it describes as "asymmetric downside risk" for the stock. This surge is part of a broader upward trend, with InvestingPro data showing a six-month return of 51%. Analyst price targets currently range from $12 to $28, reflecting mixed sentiment about the company’s prospects.
Barclays’ 2027 earnings per share estimate for Oscar Health stands at $1.28, which is 39 cents (25%) below consensus estimates, supporting the firm’s Underweight rating on the health insurance company.
In other recent news, Oscar Health Inc. reported impressive first-quarter 2025 earnings, surpassing Wall Street expectations with an earnings per share (EPS) of $0.92, compared to the projected $0.81. The company also exceeded revenue forecasts, achieving $3.05 billion against the anticipated $2.84 billion, marking a 42% year-over-year increase. Oscar Health’s net income improved by $98 million, reaching $275 million, while earnings from operations rose by $112 million to $297 million. Membership also saw significant growth, ending the quarter with 2 million members, a 41% increase year-over-year.
In another development, Piper Sandler revised its outlook on Oscar Health, lowering the price target from $25 to $18 but maintaining an Overweight rating. The adjustment was influenced by potential policy changes affecting the Affordable Care Act marketplace, which could impact Oscar Health’s performance in the coming years. Piper Sandler’s analysis suggests that Oscar Health may face challenges due to these policy changes, leading to adjustments in their estimates for 2026 and 2027. The firm’s new price target reflects a consistent 15x multiple of the estimated lower adjusted EBITDA for 2026, considering the anticipated policy landscape.
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