Morgan Stanley upgraded primary care provider Oak Street Health ( NYSE: OSH ) and downgraded health insurer Oscar Health ( NYSE: OSCR ), citing comments on their path to profitability following the recent company updates.
The analyst Michael Ha sees improving prospects for Oak Street Health ( OSH ) to achieve profitability by 2025, with revenue CAGR maintained at more than 25%.
With its recently announced $300M term loan facility, the company has adequate capital to reach the profitability target despite the planned reduction to new center growth, the analyst added, keeping the $30 per share target on OSH unchanged.
Slashing the price target on Oscar Health ( OSCR ) to $5 from $9 per share, Morgan Stanley says the company can achieve its “accelerated path to enterprise profitability,” but at the expense of membership growth.
“While we view the accelerated timeline of reaching enterprise profitability by 2024 (1 year early) as a positive development (announced in 3Q), this was seemingly accomplished by significantly reducing membership growth,” the firm wrote.
Morgan Stanely also reiterated the Underweight rating on Oscar Health’s ( OSCR ) rival Bright Health Group ( BHG ).
Oscar Health ( OSCR ) has lost ~76% over the past month, underperforming the other two companies, as indicated in this graph .
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Oak Street upgraded; Oscar Health downgraded at Morgan Stanley on profit outlook