On Monday, UBS began coverage of Oscar Health Inc (NYSE:OSCR), issuing a Neutral rating and setting a price target of $23.00. The firm's analysis acknowledges Oscar Health's progress in executing growth initiatives, yet maintains a cautious stance due to the company's current valuation, which they believe largely reflects this progress.
UBS projects that Oscar Health will experience positive developments in 2025, anticipating a slight edge over consensus estimates with projected revenues of $11.1 billion compared to the consensus of $10.9 billion, and earnings per share (EPS) of $0.69 over the consensus of $0.66. This optimism is attributed to expected re-pricing from larger industry peers.
Looking further ahead, UBS adopts a more conservative outlook for 2026 and 2027. The firm forecasts revenues of $11.6 billion and $13.6 billion for these years, respectively, which is slightly below the consensus estimates of $12.0 billion and $13.9 billion. Similarly, the EPS estimates are set at $1.03 and $1.79 for 2026 and 2027, compared to the consensus projections of $1.17 and $1.84.
The analysis by UBS culminates in an anticipated 3-year compound annual growth rate (CAGR) of approximately 15% for Oscar Health's revenue from 2025 to 2027. This growth expectation is based on the company's strategic initiatives and market positioning, balanced against the broader industry context and comparative financial forecasts.
In other recent news, Oscar Health has been making significant strides, as highlighted by Piper Sandler's maintained Overweight rating on the company's stock. The firm's analysis underscored Oscar Health's strategic positioning, scalability, and potential to manage cost trends effectively. It also projected a below-market average increase in Oscar Health's premium per member per month for the Florida Individual Exchange in 2025.
Oscar Health's recent Q2 results were robust, with total revenue reaching $2.2 billion, marking a 46% increase year-over-year. Following these results, Piper Sandler demonstrated confidence in Oscar Health by raising the company's stock target from $25.00 to $28.00. The company also revised its full-year 2024 revenue and adjusted EBITDA guidance upwards, indicating a positive momentum.
Furthermore, Oscar Health reported growth in membership, an improved medical loss ratio, and a substantial rise in adjusted EBITDA. The company is strategically focused on expanding its market presence and diversifying growth through the Individual Coverage Health Reimbursement Arrangement (ICRA) business.
InvestingPro Insights
Recent data from InvestingPro offers additional context to UBS's analysis of Oscar Health Inc (NYSE:OSCR). The company's market capitalization stands at $4.87 billion, reflecting investor confidence in its growth trajectory. Oscar Health's revenue growth is particularly noteworthy, with a 45.16% increase in the last twelve months as of Q2 2024, aligning with UBS's projections for continued expansion.
InvestingPro Tips highlight that Oscar Health's net income is expected to grow this year, supporting UBS's positive outlook for 2025. Additionally, the company has been profitable over the last twelve months, with analysts predicting continued profitability this year. These factors contribute to the optimistic revenue and EPS forecasts presented by UBS.
However, investors should note that Oscar Health is trading at a high earnings multiple, with a P/E ratio of 255.06. This valuation metric aligns with UBS's cautious stance on the current stock price. The company's stock has shown strong performance, with a remarkable 262.88% return over the past year, potentially factoring in much of the anticipated growth.
For readers interested in a deeper dive, InvestingPro offers 12 additional tips for Oscar Health, providing a comprehensive view of the company's financial health and market position.
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