Investing.com -- Barclays has upgraded two key players in the U.S. health insurance sector, highlighting potential growth opportunities in the Affordable Care Act (ACA) exchange market.
The investment bank has identified Centene Corporation (NYSE:CNC) and Oscar Health (NYSE:OSCR) as companies positioned to benefit from strategic pricing in the ACA marketplace. Both insurers have implemented significant premium increases while maintaining competitive positioning, according to Barclays’ detailed analysis.
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Centene emerges as the top pick with an Overweight rating, while Oscar Health has been upgraded to Equal Weight. These upgrades come amid a changing landscape in the health insurance market, particularly within ACA exchanges.
Centene Corporation Barclays has upgraded Centene to Overweight, citing the company’s strong potential for ACA exchange margin improvement. The bank’s detailed pricing analysis shows Centene is ideally positioned with substantial premium increases of approximately 34% while maintaining stable competitive positioning. This balance allows the company to improve margins while mitigating adverse selection risks by attracting a broader risk pool. Barclays projects ACA margins to reach 2.0% (a 300 basis point year-over-year improvement) with stable Medicaid margins in 2026, followed by a 40 basis point improvement in 2027. These improvements support Barclays’ earnings per share forecasts of $3.50 for 2026 and $5.64 for 2027, which exceed current Street estimates by 23% and 40%, respectively.
In other developments, Centene saw Bernstein raise its price target to $45, citing expectations for margin recovery in its Marketplace business, while Cantor Fitzgerald maintained its Neutral rating on the stock.
Oscar Health Barclays has upgraded Oscar Health to Equal Weight with an $18 price target, representing a 16x target price-to-earnings ratio. The bank believes the market has over-discounted potential negative outcomes from expiring subsidies, noting Oscar’s 13% decline in December while the S&P remained flat. Their analysis shows Oscar implementing healthy rate increases of approximately 28%, consistent with market trends, paired with leading competitive positioning. However, Barclays notes that larger swings in relative positioning and a lower absolute rate increase create a wider range of potential outcomes. At current sub-$15 pricing, Barclays sees a more balanced risk-reward profile for Oscar. The bank projects 2027 earnings per share of $1.10, assuming nearly breakeven margins in 2026 and 2.4% margins in 2027.
In recent news, Oscar Health received multiple analyst upgrades, including to Overweight from Piper Sandler based on its profitability outlook and to Neutral from UBS, which cited a better-than-expected enrollment outlook.
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