Oscar Health, the Healthcare sector company, was revisited by a Wall Street analyst yesterday. Analyst Joanna Gajuk from Bank of America Securities maintained a Sell rating on the stock and has a $11.00 price target.
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Joanna Gajuk’s rating is based on several concerning factors regarding Oscar Health’s financial outlook. The company reaffirmed its 2025 guidance, which included an increased Medical Loss Ratio (MLR) due to higher-than-expected risk adjustment payments. This adjustment aligns with trends seen in other managed care organizations, indicating a broader industry challenge. Gajuk maintains a cautious stance as uncertainties loom over the expiration of enhanced subsidies, potential declines in exchange enrollment, and further increases in exchange morbidity.
Looking ahead to 2026, the expiration of enhanced subsidies is expected to lead to significant disenrollment, altering the risk pool and complicating pricing strategies. Anticipated rate increases in exchange plans, ranging from 10-40% in some states, highlight the uncertainty surrounding morbidity expectations and profitability. Although Oscar Health plans to reduce administrative costs, the overall outlook remains challenging, with conservative modeling for the second half of 2025 reflecting these concerns. These factors contribute to Gajuk’s decision to rate Oscar Health with a Sell recommendation.
Gajuk covers the Healthcare sector, focusing on stocks such as Encompass Health, HCA Healthcare, and UnitedHealth. According to TipRanks, Gajuk has an average return of -1.8% and a 50.00% success rate on recommended stocks.
In another report released today, Barclays also maintained a Sell rating on the stock with a $11.00 price target.