Investing.com -- Piper Sandler upgraded Oscar Health to overweight after concluding the insurer can lift margins and grow share even if enhanced premium subsidies expire at the end of 2025, a shift that could shrink the ACA Marketplace by as much as 30%.
The brokerage said Oscar has designed and priced its 2026 products for a harsher operating backdrop, including the loss of enhanced subsidies, higher utilization, tariffs and a weaker risk pool.
Weighted average rates for 2026 are up 28% on a year-over year basis, which Piper says looks a deliberate push to recapture gross and operating margins.
Oscar expects Marketplace enrollment to fall sharply in 2026, with the broker citing an internal scenario that shows the market dropping to about 18.2 million members from 24.3 million in 2025.
Oscar still expects to expand market share and improve margins in that environment, supported by product design that lets many members buy down to similar plans at lower metal tiers to manage cash premiums. The company also expanded condition specific offerings and introduced a menopause focused product.
Piper highlighted Miami-Dade as an example of how Oscar’s strategy could work. Most Oscar members there already pay some level of cash premium, and the broker said those customers tend to be more deliberate shoppers who will remain engaged through 2026.
Oscar’s new bonus program is aimed at pulling broker-driven sales into November, when agents have more capacity to review plans.
The brokerage said Oscar’s mix will shift further toward bronze next year as higher premiums push healthier members to cheaper plans. It models a 40 basis point improvement in medical loss ratio in 2026 and another 80 basis points in 2027, supported by mid-double digit cost trend assumptions.
Piper expects adjusted EBITDA of $404 million in 2027, which it called the floor, and raised its price target to $25 from $13 based on 15x 2027 adjusted EBITDA.
