Oscar Health, Inc. (NYSE: OSCR) experienced a sharp rise in its stock price on Thursday after a key legislative development in Washington. The U.S. House of Representatives approved a bill that extends the healthcare subsidies offered through the Affordable Care Act. This subsidy extension is anticipated to favorably influence insurers like Oscar Health, whose business model heavily relies on individual ACA exchange membership. The stock movement follows closely on the heels of Barclays upgrading the stock and increasing its price target, reflecting a renewed confidence in the company’s outlook.
Barclays recently upgraded Oscar Health's rating from Underweight to Equal-Weight, simultaneously raising the price target from $13 to $18. This upward revision stems from a more optimistic assessment of the company’s prospects amid the subsidy extension. The legislative continuation plays a vital role in stabilizing the environment for Oscar Health by reducing the risk that escalating premiums might cause member attrition, particularly among healthier subscribers. Had the subsidies not been extended, Oscar Health faced heightened potential challenges threatening its foundational business model.
Oscar Health's trajectory since its 2021 public debut has been marked by volatility. Initially entering the market positioned as a technology-driven insurtech player targeting ACA exchanges, it prioritized aggressive membership growth ahead of profitability. This emphasis resulted in significant financial losses and led to sharp fluctuations in its stock price as market participants debated the long-term sustainability of its approach and dependence on government subsidies.
In recent years, Oscar Health has shifted toward a more disciplined underwriting approach, withdrawing from less profitable markets and harnessing operational leverage as its customer base expands. These strategic adjustments offer a nuanced investment proposition: while the stock has seen substantial downturns, there have also been notable rallies during periods when confidence in profitability and regulatory support strengthened.
From a technical standpoint, Oscar Health's shares currently trade 13.8% above their 20-day simple moving average and 2.3% above the 100-day SMA, signaling short-term strength. Over the past year, the stock has gained approximately 16.29%, nearing its 52-week high rather than its low, which speaks to a relatively positive trend. The Relative Strength Index (RSI) stands at 53.56, suggesting a neutral momentum without indications of an overbought or oversold condition. Meanwhile, the Moving Average Convergence Divergence (MACD) indicator remains above its signal line, indicating bullish momentum. This combination of technical indicators suggests a balanced outlook with mixed signals for traders. Key technical levels to monitor include resistance near $19.00 and support around $14.50.
Looking ahead, market participants are anticipating Oscar Health's next earnings release scheduled for February 10. Analysts are forecasting an earnings per share loss of $0.89, which would represent a deepening compared to a $0.62 loss the previous year. However, revenue estimates point to an increase to $3.16 billion from $2.39 billion year over year. The consensus analyst rating remains a Hold with an average price target of approximately $14.64. Several recent analyst actions include UBS upgrading Oscar Health to Neutral with a $17 price target, Barclays upgrading to Equal-Weight with an $18 target, and Stephens & Co. initiating coverage with an Equal-Weight rating and a $17 target.
According to Benzinga Edge rankings, Oscar Health displays a bullish momentum score of 51.24 out of 100, indicating relative outperformance compared to the broader market. However, the overall outlook remains mixed, warranting caution from investors regarding the stock’s volatility and fundamental metrics.
The stock holds notable exposure in key exchange-traded funds (ETFs). For instance, the SPDR S&P Insurance ETF (NYSE: KIE) carries a 2.19% weighting of Oscar Health, and the State Street SPDR S&P Insurance ETF also includes a 1.91% share. The Trenchless Fund ETF (NYSE: RVER) holds an 8.56% weighting in OSCR. As a result, inflows or outflows within these ETFs could induce automatic buying or selling pressure on Oscar Health shares.
At the time of publication, Oscar Health’s shares had appreciated approximately 7.43%, trading near $17.93. This price movement reflects the combined effect of the subsidy extension and positive analyst sentiment.