By Mariapaula Gonzalez

Shares of health insurance agency Oscar Health edged higher despite UBS' advice for investors to sell the stock, citing enrollment declines and the looming uncertainty of federal subsidies.

A team of UBS analysts led by Jonathan Yong downgraded the healthcare stock from Neutral to Sell, lowering the stock-price target to $11 from $18. Premium surges and heightening federal oversight across the country could chill customer retention in the near future.

"While the company have levers to pull, it is difficult to see the stock working when the overall Exchange environment will be significantly challenged and we see risks to the company achieving their targets," the analysts wrote in a Tuesday note.

Oscar Health didn't immediately reply to a request for comment about the downgrade.

The stock bumped 0.2% to $15.11 during afternoon trading, with shares on track for their best two-day stretch since Jun. 23, when they rose 8.8%. Shares are up 14.6% this year.

Analysts expect enrollment numbers to decrease by 30% in 2026, which is a worse outlook from their previous estimate of 18%. Even if the company increases its premiums by 25%, analysts say they won't make up for the significant membership drop.

Though Oscar may be reserving funds for future medical claims, the analysts suggest that the insurer will likely face pressure on its Medical Loss Ratio, which means a higher rate of premiums will go toward medical claims and in turn, hampers profitability.

Analysts also expect Oscar to report "bumpy" second-quarter earnings on Aug. 6. The team anticipates Oscar to post diluted earnings per share of 12 cents, down from Wall Street's consensus of 29 cents.

Oscar is one of many insurers struggling for air in a murky healthcare industry. Earlier this month, Centene pulled back its guidance for the year after it reported higher market morbidity, which means the insured population experienced an increased number of illnesses. Elevance Health recently shared in its first-quarter earnings report that individuals in its Exchange plans are using more medical services than expected, racking up costs for insurers.

The Public Health Insurance Exchanges, created by the Affordable Care Act in 2010, are where many Oscar members receive their health insurance. But the Republicans' "One Big Beautiful Bill Act" could hike up premiums by up to $485 per person a year for the 179 million Americans with employer-based coverage, according to an analysis from the labor union AFL-CIO. The bill would also fail to extend enhanced premium subsidies set to expire at the end of this year for ACA plans.

With uncertainty remaining in the industry, insurers like Oscar are in trouble, the analysts say. "All-in, this culminates in limited visibility into the marketplace overall and makes it difficult for the stock to work, in our view, particularly with OSCR's current framework for their targets," they wrote.

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July 15, 2025 15:43 ET (19:43 GMT)

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