OSCR vs. CLOV: Which Stock Is A Better Buy Now?

In this piece, we’ll check in on two mid-cap health insurance plays that are leveraging their tech-savvy and digital strengths to grab a bigger slice of the health insurance industry. Indeed, if there’s an industry in need of a bit of tech-driven disruption, it’s the health insurance space, which has undergone tremendous turbulence in recent years.

Oscar Health (NASDAQ:OSCR) and Clover Health Investments (NASDAQ:CLOV) are two tech-focused healthcare players that have captured the attention of Wall Street in recent years. And while it’s too soon in the game to tell if their tech-first approach will help them take a big chunk of market share away from the big-league incumbents, I do find them to be enticing names to add to a watchlist, especially as their shares come in further. Indeed, shares of both mid-cap up-and-comers have taken a hit to the chin in recent quarters.

The health insurance space isn’t where growth-minded investors have wanted to be of late. But where some see “dead money,” others may see a rare opportunity to step up as a contrarian. Though the value proposition is enticing after the latest correction in these two mid-caps, I would encourage investors to tread forward with caution, given the force of headwinds working against the entire industry and the unanswered questions that could keep shares of industry players depressed for a while longer.

In any case, let’s take a closer look at the two names to gain a better understanding of how these firms can grow in a hard-hit industry that’s ripe for tech-driven change.

Oscar Health

Shares of Oscar Health are fresh off a painful plunge of more than 38% from 52-week highs. Undoubtedly, a handful of analyst downgrades and growing distaste for the health insurance stocks are a primary reason many investors have opted to sell first and ask questions later. Indeed, you can’t blame investors for fleeing the stock, especially amid giant question marks surrounding the fate of government subsidies under the Trump administration.

Additionally, the health insurance industry has had to grapple with rising medical loss ratios of late. It’s really eaten into profitability across the board and has sparked a wave of selling across some of the top industry players. And while the wave of sell ratings (I lost count of how many big-name analysts downgraded the stock over the past month) makes for a scary name to put new money into this summer, I do think Oscar is one of the more interesting health insurance names in the space.

The high-tech +Oscar ecosystem shows tremendous promise, especially as AI agents bring forth a disruptive wave of automation across the broader economy. Though the platform won’t turn the tide overnight, especially as headwinds prevail. But it is something to keep tabs on as the firm looks to digitally transform the industry. For now, I’m not willing to try to be a hero by picking up shares on the way down. Not with so few analysts pounding the table on the name and the risk of mounting losses going into year’s end. 

Clover Health

Clover Health (NASDAQ:CLOV) is another mid-cap, high-tech insurer that’s had a rough year, with shares now down 3% year to date and over 37% from 52-week highs. Undoubtedly, many of the same industry pressures facing Oscar have been a concern for Clover. The one plus for Clover is that it hasn’t had a slew of analysts turning their back on the name in such a brief timeframe.

With a “Clover Assistant” platform that holds plenty of promise, the firm seems well-equipped to thrive in the AI-driven age. In any case, as headwinds linger, I’d say there’s a risk that Clover dips in and out of profitability. As impressive as the platform is, I’m more inclined to wait and see how things go before punching a ticket to the stock. With earnings just over a week away, perhaps investors keen on the name will get a better entry point.

If Clover can get AI right, there’s a lot of growth to be had. But until industry headwinds show signs of backing off, I’d hold off on picking up any shares. If I had to pick one name, it’d have to be CLOV. The $1.5 billion is starting to get quite cheap at close to 1.0 price-to-sales (P/S), and the tech-driven growth narrative is worth getting behind, as it may have what it takes to take on the incumbents. Still, it takes time to take down the giants in the industry. As such, I’d rather buy a name like CLOV on strength than weakness, given how punishing it can be to catch a falling knife in an industry facing growing pressures.

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