Oscar Health: Should You Buy OSCR Stock At $17?

Forbes

a day ago

CHONGQING, CHINA - MAY 04: In this photo illustration, the logo of Oscar Health, Inc. is displayed ... More on a smartphone screen, with the company's branding visible in the background, on May 04, 2025, in Chongqing, China. (Photo illustration by)
On July 2nd, the health insurance sector underwent a notable decline following Centene (NYSE:CNC)'s retraction of its financial outlook, citing rising costs. Refer to – Centene: Is The Recent Decline In CNC Stock Justified? This announcement caused turmoil in the market, leading to a 40% plunge in Centene's stock. Other significant players also faced considerable declines: Oscar Health (NYSE: OSCR) decreased by 19%, UnitedHealth (NYSE: UNH) dropped 6%, Molina (MOH) fell 22%, and CVS (CVS) saw a decrease of 4%.
The primary issue confronting these insurers is a legitimate one: increasing medical costs are diminishing their profits. This rise in expenses is due to various factors, including a higher number of less healthy individuals enrolling, an uptick in the volume of medical procedures, and persistently high prices for drugs.
Given these industry-wide difficulties, a critical question for investors is whether Oscar Health's stock, currently priced around $17, represents a buying opportunity. Although OSCR has risen 23% year-to-date, it is still trading 30% below its 52-week peak of over $23.
We believe that OSCR stock represents a solid choice at its current price of $17. Our conclusion is drawn from a thorough analysis of Oscar Health's current valuation in relation to its recent operational performance as well as its historical and present financial health. Our detailed evaluation of Oscar Health emphasizes essential factors: Growth, Profitability, Financial Stability, and Downturn Resilience. Our analysis reveals that the company has moderate operational performance and financial condition, yet its current valuation is appealing, which we explain in more detail below. However, for those seeking upside with lower volatility than individual stocks, the Trefis High Quality portfolio offers an alternative — having outperformed the S&P 500 and delivering returns exceeding 91% since its launch. Separately, refer to – UnitedHealth: Buy Or Sell UNH Stock At $325?
How Does Oscar Health's Valuation Compare to The S&P 500?
When considering what you pay per dollar of sales or profit, OSCR stock appears slightly undervalued in relation to the broader market.
How Have Oscar Health's Revenues Evolved in Recent Years?
Oscar Health's Revenues have increased significantly over the past few years.
How Profitable Is Oscar Health?
Oscar Health's profit margins are significantly lower than most companies within the Trefis coverage universe.
Is Oscar Health Financially Stable?
Oscar Health's balance sheet appears quite robust.
How Resilient Is OSCR Stock During A Downturn?
OSCR stock has performed significantly worse than the benchmark S&P 500 index during several recent downturns. As investors hope for a gentle landing by the U.S. economy, how severe could the situation be if another recession occurs? Our dashboard How Low Can Stocks Go During A Market Crash shows how crucial stocks performed during and after the last six market crashes.
Summarizing the Findings: Implications for OSCR Stock
In conclusion, Oscar Health's performance across the previously mentioned criteria is as follows:
In summary, Oscar Health has shown a moderate performance across the essential criteria of Growth, Profitability, Financial Stability, and Downturn Resilience. Although its profit margins seem modest compared to the broader market, this is common for the health insurance sector, which generally operates on thin margins and high volumes.
This industry-wide trait is also reflected in valuation standards. For example, Centene and CVS trade at 0.2 times their revenue, Molina at 0.4 times, and UnitedHealth (UNH) at 0.7 times.
Despite these industry standards, we contend that Oscar Health's technological framework and robust revenue growth justify a higher valuation multiple than that of several more traditional insurance competitors. Overall, we consider it a solid choice at present levels.
However, it is crucial to recognize potential risks. Investors may be reluctant to assign a higher multiple due to the naturally slim margins in the industry and the stock's volatility. Thus, investors should carefully assess these risks before making a decision to invest in Oscar Health. There always exists a significant risk when investing in a single stock, or merely a few. Consider Trefis High Quality (HQ) Portfolio which, comprising 30 stocks, has a history of consistently outperforming the S&P 500 over the last 4-year span. What accounts for this? Collectively, HQ Portfolio stocks yielded superior returns with reduced risk compared to the benchmark index; less of a roller-coaster experience, as evidenced in HQ Portfolio performance metrics.