12:27 PM EDT, 05/30/2024 (MT Newswires) -- Oscar Health's ( OSCR ) near-term upside could be limited given the upcoming election and lack of clarity on the Affordable Care Act subsidy, BofA Securities said in a note Thursday.

Analysts, including Adam Ron, said that as the election approaches, uncertainty surrounding exchange subsidies, introduced under Biden and set to end Jan. 1, 2026, could drag down the stock. It's hard to argue that the stock's value will increase under these conditions. They added that given Oscar Health's ( OSCR ) strong performance in the past year, up almost 200%, and the uncertainty about the subsidies, the firm now sees a more balanced risk-reward scenario.

The company is "a high growth insurer that differentiates itself with its technology platform creating multiple avenues for the company to monetize its technology," the analysts said. "We think Oscar Health ( OSCR ) has potential to grow faster than average, while improving margins. However, we are cautious around the upcoming election and the implications for expanded ACA subsidies to expire."

The analysts added that even in a bear case, they expect Oscar Health ( OSCR ) to reach $0.40 of GAAP EPS by 2026. If subsidies continue, they project EPS of $1. A 50/50 chance for each scenario, the blended EPS estimate is around $0.70.

BofA Securities downgraded the company to neutral from buy and adjusted its price target to $21 from $25.

Price: 19.87, Change: -0.31, Percent Change: -1.54