Wells Fargo upgraded its rating on health insurance company Oscar Health, Inc. from Underweight to Equal Weight on Thursday, significantly raising its price target from $11 to $20. This news propelled Oscar Health, Inc. shares to surge more than 11% intraday.
Analyst Stephen Baxter from Wells Fargo stated the upgrade is primarily based on increased confidence in the Affordable Care Act market. Baxter noted that the previous bearish view was rooted in the company's potential failure to adequately adjust its 2026 pricing for anticipated medical cost pressures. However, current enrollment and medical cost results have surpassed expectations, bolstering confidence in the 2026 ACA market outlook.
Florida, representing approximately 63.9% of Oscar Health, Inc.'s premium revenue, is its most crucial market. Data shows the state's membership declined 13.5% year-over-year, but the medical loss ratio improved by 370 basis points. The company also maintains a conservative buffer of around 639 basis points in risk adjustment. Despite this, Baxter cautioned that uncertainty in the HIX market is expected to remain elevated, particularly beyond 2026.
Beyond the rating upgrade, Oscar Health, Inc.'s fundamentals are showing robust momentum. The company's first-quarter 2026 results revealed total revenue reached $4.65 billion, a 53% increase year-over-year. Net income was $679 million, or $2.07 per share, significantly exceeding market expectations of $1.10. Membership totaled 3.2 million by the end of the quarter, a 56% rise. CEO Mark Bertolini attributed the strong performance to rigorous cost control, an expanding membership base, and the application of AI technology across all business areas.
It is noteworthy that Oscar Health, Inc. reaffirmed its full-year 2026 guidance, projecting total revenue between $18.7 billion and $19.0 billion and expecting a significant expansion in profit margins. However, management also warned that regulatory changes, such as the expiration of subsidies, could impact future membership size and market scale.
As of Thursday's intraday trading, Oscar Health, Inc. shares were at $22.83, with a year-to-date gain exceeding 40%.