The Early Bird - Stock of the Day

The Cigna Group (CI)

$299.92

+$0.24 (+0.1%)

Market Cap: $83.36B

About The Cigna Group

The Cigna Group, together with its subsidiaries, provides insurance and related products and services in the United States. Its Evernorth Health Services segment provides a range of coordinated and point solution health services, including pharmacy benefits, home delivery pharmacy, specialty pharmacy, distribution, and care delivery and management solutions to health plans, employers, government organizations, and health care providers.

The company's Cigna Healthcare segment offers medical, pharmacy, behavioral health, dental, and other products and services for insured and self-insured customers; Medicare Advantage, Medicare Supplement, and Medicare Part D plans for seniors, as well as individual health insurance plans; and health care coverage in its international markets, as well as health care benefits for mobile individuals and employees of multinational organizations. In addition, it offers permanent insurance contracts sold to corporations to provide coverage on the lives of certain employees for financing employer-paid future benefit obligations. The company distributes its products and services through insurance brokers and consultants; directly to employers, unions and other groups, or individuals; and private and public exchanges. The company was formerly known as Cigna Corporation and changed its name to The Cigna Group in February 2023. The Cigna Group was founded in 1792 and is headquartered in Bloomfield, Connecticut.

The Cigna Group Bull Case

Here are some ways that investors could benefit from investing in The Cigna Group:

The Cigna Group has a strong average rating of "Moderate Buy" from analysts, indicating positive sentiment and potential for stock appreciation.
The company recently increased its quarterly dividend to $1.51 per share, reflecting a commitment to returning value to shareholders. This translates to an annualized dividend yield of approximately 2.07%, which can provide a steady income stream for investors.
Current stock price is $292.12, which is significantly lower than the consensus target price of $373.69, suggesting potential upside for investors looking to buy at a discount.
The Cigna Group has a solid market capitalization of approximately $81.25 billion, indicating a stable and established presence in the insurance and health services sector.
Despite a recent earnings miss, the company reported a return on equity of 18.61%, showcasing effective management and profitability, which can be attractive to investors seeking growth.

The Cigna Group Bear Case

Investors should be bearish about investing in The Cigna Group for these reasons:

The Cigna Group's recent earnings report showed a miss on consensus estimates, with earnings per share of $6.64 compared to the expected $7.84, which may raise concerns about future profitability.
The stock has experienced volatility, with a 1-year low of $262.03, indicating potential risks associated with price fluctuations that could affect investor returns.
The company's net margin of 1.39% is relatively low, suggesting that profitability may be constrained, which could impact future growth and dividend payments.
Analysts have recently adjusted their price targets downward, with several firms reducing their targets significantly, which may indicate a lack of confidence in the stock's near-term performance.
The Cigna Group has a debt-to-equity ratio of 0.70, which, while manageable, indicates that the company is using a moderate amount of debt to finance its operations, potentially increasing financial risk in a rising interest rate environment.

Follow The Money To Cigna

Written By Thomas Hughes on 5/10/2022

Cigna Falls On Strong Results, Analyst Upgrade

It is times like this when following the money can give the best returns and the money is flowing toward Cigna (NYSE: CI). The company released a better than expected earnings report and raised its guidance sparking yet another wave of analysts upgrades and price target revisions. The latest includes at least 7 post-release commentaries with 7 price target upgrades and a new high price target as well. The high price target comes from Cowen which upgraded the stock to Outperform citing a number of catalysts for higher share prices. Among them are the stock's low valuation, an inflation-induced tailwind for managed healthcare, increasing market share, and an oncoming wave of biosimilar medications that will drive revenue for the pharmacy segment.

Cowen’s price target of $329 is up from the previous $262 and compares very well to the Marketbeat.com consensus of $276. The consensus is only 5% above the current price action compared to almost 25% for Cowen’s target but the consensus is trending higher. Assuming the other 16 analysts following the stock see similar catalysts in store for the company there should be a few more upgrades and/or price targets at least. Until then, the stock is rated as a firm Buy by the analyst community.

Cigna Beats And Raises Guidance For 2022

Cigna had a great quarter supported by strength across all business segments. The company reported $44.01 billion in net revenue for a gain of 7.4% over last year. The revenue also beat the Marketbeat.com consensus by 120 basis points and the good news does not end there. Moving down to the earnings, both segments contributed to earnings power and a YOY increase in margin. Digging a little deeper, a 180 basis point improvement in Cigna margin was offset by a 10 basis point contraction in Evernorth and both are better than expected. The $6.01 in adjusted EPS is up from last year’s $4.73 and a company record.

Turning to the guidance, the company raised its revenue target to at least $177 billion versus the consensus of $179 but it is the earnings guidance that has us interested. The adjusted EPS is expected to be at least $22.60 versus the consensus of $22.49 which is very good news for shareholders. The company is using its capital to buy back shares and pay a dividend that we view as growing. The company has only increased the distribution for two years but there is ample room in the numbers and earnings growth in the forecast. In our view, the company may not continue the 150% CAGR it has set but a healthy double-digit pace of increase is a reasonable expectation.

The Technical Outlook: Cigna Might Have Just Peaked Out

Institutional buying has been supporting Cigna's price action for years but the market may have just topped out. While the institutional activity has been net bullish over the last year it has been fairly balanced and not the support it has been in the past. This may keep price action from moving much higher in the near term but the long-term outlook is still bullish. In the near-term, price action may move sideways within the newly established range of $240 to $280 before setting a new high. The risk is that institutional support will fail and we don’t see that happening right now, not with the stock trading at 10X its earnings and yielding 1.7%. Longer-term, we see Cigna completing a consolidation at the current levels and then moving up to new highs as revenue, earnings, and capital returns grow.

Follow The Money To Cigna And Be Rewarded