Piper Sandler cuts Oscar Health price target to $18 from $25

On Monday, Piper Sandler adjusted its outlook on Oscar Health Inc (NYSE:OSCR), lowering the price target to $18.00 from the previous $25.00. Despite the reduction, the firm maintained its Overweight rating on the company’s shares. Currently trading at $15.42 with a market capitalization of $3.92 billion, Oscar Health has demonstrated strong revenue growth of 54.26% over the last twelve months. InvestingPro analysis reveals 8 additional key insights about the company’s performance and outlook.

The revision comes in light of potential policy changes that could significantly impact the Affordable Care Act (ACA) marketplace. Jessica Tassan of Piper Sandler noted that provisions in the Patient Protection and Affordable Care Act Proposed Rule, combined with the House reconciliation bill, might decrease ACA marketplace enrollment by an additional 4 million members. This is on top of the projected disenrollment due to the expiration of enhanced premium tax credits at the end of December 2025. The company trades at a P/E ratio of 35.81, reflecting market expectations of continued growth despite these challenges.

The Congressional Budget Office (CBO) projects that these factors could collectively result in a year-over-year reduction of approximately 7.9 million members in the ACA marketplace for the calendar year 2026, compared to the 3.9 million member impact anticipated from the enhanced premium tax credit expiration alone.

Tassan elaborated on the potential implications for Oscar Health, stating that the company’s guidance for the calendar year 2025 might not have fully accounted for the risk adjustment and trend assumptions that these policy changes could bring. As a result, Piper Sandler has also adjusted its estimates for Oscar Health’s performance in the calendar years 2026 and 2027, considering the expected changes in enrollment, metal mix, premiums, and medical loss ratio (MLR).

The new price target of $18.00 is based on a consistent 15x multiple of the estimated lower adjusted EBITDA for the calendar year 2026. This adjustment reflects Piper Sandler’s analysis of the potential headwinds Oscar Health may face due to the evolving policy landscape. According to InvestingPro’s Fair Value analysis, the stock appears slightly undervalued at current levels. Discover comprehensive valuation metrics and detailed financial analysis in the Pro Research Report, available exclusively to InvestingPro subscribers.

In other recent news, Oscar Health Inc. exceeded expectations in its first-quarter 2025 earnings report, delivering an earnings per share (EPS) of $0.92 against the anticipated $0.81. The company also reported revenues of $3.05 billion, surpassing the forecasted $2.84 billion, marking a 42% increase year-over-year. Oscar Health’s net income rose to $275 million, a $98 million improvement from the previous year. The company experienced a 41% growth in membership, ending the quarter with 2 million members. Analysts from firms such as Raymond (NSE:RYMD) James and Wells Fargo (NYSE:WFC) raised questions about the company’s risk adjustment and membership dynamics during the earnings call. Oscar Health’s leadership highlighted the impact of technology and new partnerships on operational efficiencies and member services. The company reaffirmed its full-year 2025 guidance, projecting total revenue between $11.2 billion and $11.3 billion. As regulatory changes loom, Oscar Health remains engaged with policymakers to advocate for constructive solutions in the individual insurance market.

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