Investing.com -- UBS downgraded Oscar Health to Sell from Neutral, warning that growing instability in the Affordable Care Act (ACA) exchanges is not fully priced into the stock.
The brokerage cut its price target to $11 from $15, citing mounting headwinds tied to enrollment declines and pricing pressures.
UBS now expects Oscar’s exchange enrollment to drop by at least 30% in 2026—worse than its prior estimate of 18%—as enhanced federal subsidies expire.
The firm said Oscar is unlikely to offset the decline through pricing, estimating only a 25% recovery. A wave of premium hikes across the industry and tightening federal oversight could further disrupt margins and customer retention.
Net, we expect 2027 revenue of $12.2 billion, slightly below consensus, and EPS of $1.25 versus the Street at $1.46, the analysts wrote, adding that Oscar’s margin outlook is increasingly murky.
Second-quarter results may reflect this volatility, UBS said, especially after
Centene
(NYSE:
CNC
) pulled its full-year guidance and other insurers, including Elevance and Molina, flagged higher-than-expected exchange utilization.
While Oscar may be managing claims accruals appropriately, UBS warned that broader industry risks could still weigh on its medical loss ratio.
With over 6 million Americans at risk of losing exchange coverage in 2026 and CVS exiting with 1.2 million members, the firm said the broader market outlook remains "difficult to calibrate," making it hard for Oscar shares to find support without a more stable policy and pricing environment.