Oscar Health Inc (NYSE:OSCR): A Bullish Investment Perspective

We came across a long thesis on Oscar Health Inc (NYSE:OSCR) on ValueInvestorsClub by miser861. In this article we will summarize the bulls’ thesis on OSCR. The company’s shares were trading at $18.28 when this thesis was published, vs. closing price of $14.35 on Jan 3^rd.

© https://www.con-telegraph.ie/

Oscar Health Inc (NYSE:OSCR) is the first health insurance company built around a full-stack technology platform to provide various insurance plans for individuals, families, and employees. Also, the company provides virtual care, doctor support, scheduling appointments, and other related services. Today, OSCR is an insurer with 1.6 million members across 18 US states.

The bull thesis is centered around the idea that OSCR is severely discounted by the markets due to past problems as well as potential threats from the Republican administration – the author claims that OSCR is trading at only 8.0x the 2027 Net Income target, while he believes that the real multiple should be closer to 30x, for several reasons. First, he believes that the company will be able to maintain double-digit revenue growth rates even after 2027, as the runway for growth is very long from a scale perspective. Second, the incremental margins will still be meaningfully higher than existing margins – the current profitability is masked by 2024 growth headwinds and some investments in technology, while steady-state margins are already higher than those of competitors. Third, the author doesn’t believe a new Republican administration will make big changes to the healthcare system, considering that a lot of ACA funding is going toward red states. Finally, the company’s new CEO is praised for being a game changer and succeeding in improving efficiency and focus – the author believes the new CEO will further strengthen the competitive advantage and set the stage for “infinite” growth and scalability.

All in all, while the author does not provide a precise target price for the stock, his suggested valuation multiple implies more than 200% upside from the current market price.

While we acknowledge the potential of OSCR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than OSCR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None. This article was originally published at Insider Monkey.