Why Oscar Health Stock Was Flying High This Week

What happened

Next-generation health insurance company Oscar Health (NYSE:OSCR) was looking very healthy as an investment this week. As of mid-afternoon Friday, the company's share price was up by nearly 13% over the course of the five trading days, according to data compiled by S&P Global Market Intelligence. This was due largely to an encouraging quarterly earnings report and a pair of analyst price target increases.

So what

For its fourth quarter of 2022, Oscar earned revenue of just over $995 million, which was more than double the $496 million in the same period the previous year.

On the other hand, the insurer's net loss deepened to $226 million ($1.05 per share) from Q4 2021's nearly $199 million. That meant a mixed quarter, as the average analyst estimates for the two line items were $1.18 billion for revenue and $1.14 per share for net loss.

Investors were more encouraged by Oscar's full-year 2023 guidance, which calls for $6.4 billion to $6.6 billion in direct and assumed premiums, and an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss of $75 million to $175 million. It did not provide a net earnings forecast.

Now what

In the wake of that earnings report, several analysts upped their expectations for Oscar. Nathan Rich of ever-influential investment bank Goldman Sachs raised his price target on the stock by over 42%. He cranked it to $5 per share from his previous $3.50, although he left his neutral recommendation unchanged.

Gary Taylor at Cowen doubled his price target, to $6 per share from $3, and like Rich maintained his equivalent of a neutral recommendation. Taylor wrote in a new research note that Oscar anticipates being profitable in 2024, however at least some of this will be effected with cost-cutting, and growth will probably be limited.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group. The Motley Fool has a disclosure policy.