Sell Rating on Oscar Health: Rising Risks and Structural Challenges Ahead

Oscar Health (OSCR – Research Report), the Healthcare sector company, was revisited by a Wall Street analyst yesterday. Analyst David Windley from Jefferies maintained a Sell rating on the stock and has a $12.00 price target.

David Windley has given his Sell rating due to a combination of factors affecting Oscar Health. Despite a recent increase in membership that initially reassured investors, there are ongoing concerns about rising utilization rates and risk adjustment dynamics that could impact margins in 2025. The stock has shown volatility, and the future appears challenging for a geographically concentrated health insurance marketplace operator like Oscar Health.
Windley points out that while there have been positive developments such as enrollment growth and meeting expectations, there are significant risks on the horizon. These include the potential expiration of enhanced premium tax credits, regulatory changes that could shift risk pools unfavorably, and the possibility of increased attrition. Additionally, Oscar Health’s rising risk adjustment payables suggest that market risk scores are increasing, which could lead to further financial pressure. Overall, Windley remains skeptical about Oscar Health’s ability to navigate these structural disruptions without experiencing significant revenue and margin challenges.

In another report released yesterday, Bank of America Securities also reiterated a Sell rating on the stock with a $13.50 price target.

OSCR’s price has also changed moderately for the past six months – from $13.640 to $17.020, which is a 24.78% increase.