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Investing.com - Oscar Health Inc (NYSE:OSCR) was downgraded by Piper Sandler from Overweight to Neutral with a price target reduction to $14.00 from $18.00 on Monday. The stock, which has declined over 14% in the past week, currently trades at $14.38 with a market capitalization of $3.66 billion. According to InvestingPro analysis, the company appears undervalued based on its Fair Value metrics.
The research firm maintained its 15.0x multiple on the health insurer’s earnings but shifted its focus to calendar year 2027 estimated EPS of $1.02, discounting the result back one year at a 10.8% weighted average cost of capital. The company currently trades at a P/E ratio of 28.6x, with impressive revenue growth of 54% in the last twelve months.
Piper Sandler expressed comfort with Oscar Health’s CY25 guidance after reviewing 2024 risk adjustment data, recent announcements from Centene (NYSE:CNC) and Molina Health, and statutory filings from Oscar and competitors in key Florida and Georgia markets.
The downgrade reflects concerns that solid CY25 execution may not be sufficient to support the stock as the market looks ahead to 2026, with the firm noting that the risk-reward balance is softening.
Specific risks cited include provisions in The One Big Beautiful Bill Act, the CY25 Marketplace Integrity and Affordability Final Rule, and the expiration of enhanced Advanced Premium Tax Credits, which Piper Sandler expects to produce "unprecedented disenrollment, risk pool degradation and rate/trend volatility" in the Affordable Care Act Marketplace and at Oscar Health next year. Despite these challenges, the company maintains a healthy current ratio of 0.91 and a relatively low debt-to-equity ratio of 0.27.
In other recent news, Oscar Health Inc. reported strong first-quarter 2025 earnings, surpassing Wall Street expectations with an earnings per share (EPS) of $0.92, compared to the forecasted $0.81. The company also exceeded revenue projections, reporting $3.05 billion against the anticipated $2.84 billion, marking a 42% year-over-year growth. Additionally, Oscar Health’s membership grew by 41%, ending the quarter with 2 million members. Despite these positive results, analysts have expressed concerns about the company’s future. Jefferies lowered its price target for Oscar Health to $9.00, citing potential risks related to risk adjustment accruals, which could lead to substantial payables. Barclays (LON:BARC) initiated coverage with an Underweight rating, highlighting policy risks that could threaten Oscar Health’s margin and growth targets. Piper Sandler also adjusted its price target to $18.00 due to potential policy changes affecting the Affordable Care Act marketplace. These developments indicate a mixed outlook for Oscar Health, with strong current performance but potential challenges ahead.
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