Centene (CNC) and Oscar Health (OSCR) were among notable gainers in the managed care space on Monday after Barclays upgraded the companies, noting that the industry can benefit not only from a potential margin expansion but also from any rotation out of AI-related stocks.
Analyst Andrew Mok’s research note came at a time when concerns are rising over a potential burst in the so-called AI bubble that could pressure tech giants such as NVIDIA (NVDA) and Palantir Technologies (PLTR).
“Managed care offers one of the strongest combinations of diversification to AI, while delivering positively differentiated performance during AI drawdowns,” Mok wrote, adding “that combination makes managed care one of the most compelling sub-sectors in the S&P 500.”
Additionally, the analyst issued a positive outlook on managed care margins, noting that a potentially favorable 2027 Medicare Advantage rate notice could spark interest in the sector. CVS Health (CVS) and UnitedHealth (UNH) are best positioned to benefit in such a scenario, the analyst said, retaining his Overweight rating on UNH, but raising its price target to $391 from $386.
Meanwhile, any extension to Affordable Care Act (ACA) subsidies “would provide optionality to a healthy ACA margin outlook,” Mok argued as he upgraded Centene (CNC) and Oscar Health (OSCR), which run ACA marketplace businesses.
He upgraded CNC and OSCR to Overweight and Equal Weight, from Equal Weight and Underweight, with price targets raised to $54 and $18 from $44 and $13, respectively.
However, the analyst retained his Underweight rating on Molina Healthcare (MOH), noting an uncertain outlook for Medicaid, which is reeling from the Trump administration’s funding cuts.
“Emerging commentary on moderating utilization paired with intensified efforts to weed out fraud, waste, and abuse should help,” Mok wrote as he raised MOH’s target price to $164 from $144 per share.
Barclays’ other top-rated managed care stocks include Cigna (CI) and Elevance Health (ELV), for which Mok maintained his Overweight ratings with price targets adjusted to $305 and $404 from $300 and $385, respectively.
Despite winning a target hike to $245 from $234, Humana (HUM), the no. 2 MA insurer after UnitedHealth (UNH), continued to receive an Equal Weight rating due to its Star Ratings headwinds in 2026 and a potential execution risk on margin recovery from excessive membership growth.