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Cigna (CI) Rides on a Diversified Business, Capital Position
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Cigna Corp. (CI - Free Report) is well poised for growth on the back of its diversified business profile and a consistent cash flow generation.
Recently, the company launched Evernorth segment, which consists of the formerly called Health Services segment. It is witnessing continued organic growth via customer wins and expanded script volumes. The effective execution of supply-chain initiatives, stability in performance and expansion of specialty pharmacy services through Accredo, its industry-leading specialty pharmacy, bode well for this segment.
The company is on track to achieve growth within its pharmacy service portfolio including progress in specialty and underlying script, aided by a projected 98% client retention level. Its U.S. Government business continues to expand precisely the Medicare Advantage, wherein the company continues to enjoy a strong market share as well as drive product expansion. Besides, it witnesses in-market growth, thereby putting itself on track for a higher customer base with the target set in the 10-15% range for 2021. In the individual business segment, the company increased its addressable market footprint by more than 50%.
All these poise the company well for a strong revenue and consistent earnings growth in 2021. In fact, it remains on track to achieve its strategic EPS goal of $20-$21.
The company’s Medicare Advantage business achieved an annual customer Net Promoter Score (NPS) of plus 74, making 2020 the fourth consecutive year in which it gained an NPS marking. Additionally in 2021, 88% of customers will be in four-star plus rated plans. This places the company well to get a plum market share of the Medicare Advantage, which is very promising and holds a great business opportunity for all health insurers.
Also, the company’s International business continues to deliver revenue and earnings growth.
The company’s U.S Medical segment is, however, likely to see its earnings moderate a bit due to the return of medical utilization to normal levels. A rise in the medical utilization levels will induce higher medical costs.
A strong operating momentum enables the company to generate attractive operating cash flows. For 2020, cash flows exceeding $8 million are expected. This significant cash flow generation by the company combined with its ongoing deleveraging will give it a substantial strategic boost and provide it with adequate financial flexibility for 2021 and beyond.
Most impressive is the strong earnings guidance issued by the company wherein it expects consolidated adjusted revenues of approximately $158 billion for 2020, indicating growth of 53% and earnings per share in the range of $18.3-$18.6, suggestive of 37.3% growth from the respective reported 2019 baselines.
Year to date, the stock has declined 1.5% against its industry’s growth of 8.8%.
Other stocks in the same space include UnitedHealth Group Inc.(UNH - Free Report) ), Humana Inc. (HUM - Free Report) and Molina Healthcare Inc. (MOH - Free Report) , which have gained 18.2%, 18% and 58.8% over the same time frame.
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Cigna (CI) Rides on a Diversified Business, Capital Position
Cigna Corp. (CI - Free Report) is well poised for growth on the back of its diversified business profile and a consistent cash flow generation.
Recently, the company launched Evernorth segment, which consists of the formerly called Health Services segment. It is witnessing continued organic growth via customer wins and expanded script volumes. The effective execution of supply-chain initiatives, stability in performance and expansion of specialty pharmacy services through Accredo, its industry-leading specialty pharmacy, bode well for this segment.
The company is on track to achieve growth within its pharmacy service portfolio including progress in specialty and underlying script, aided by a projected 98% client retention level. Its U.S. Government business continues to expand precisely the Medicare Advantage, wherein the company continues to enjoy a strong market share as well as drive product expansion. Besides, it witnesses in-market growth, thereby putting itself on track for a higher customer base with the target set in the 10-15% range for 2021. In the individual business segment, the company increased its addressable market footprint by more than 50%.
All these poise the company well for a strong revenue and consistent earnings growth in 2021. In fact, it remains on track to achieve its strategic EPS goal of $20-$21.
The company’s Medicare Advantage business achieved an annual customer Net Promoter Score (NPS) of plus 74, making 2020 the fourth consecutive year in which it gained an NPS marking. Additionally in 2021, 88% of customers will be in four-star plus rated plans. This places the company well to get a plum market share of the Medicare Advantage, which is very promising and holds a great business opportunity for all health insurers.
Also, the company’s International business continues to deliver revenue and earnings growth.
The company’s U.S Medical segment is, however, likely to see its earnings moderate a bit due to the return of medical utilization to normal levels.
A rise in the medical utilization levels will induce higher medical costs.
A strong operating momentum enables the company to generate attractive operating cash flows. For 2020, cash flows exceeding $8 million are expected. This significant cash flow generation by the company combined with its ongoing deleveraging will give it a substantial strategic boost and provide it with adequate financial flexibility for 2021 and beyond.
Most impressive is the strong earnings guidance issued by the company wherein it expects consolidated adjusted revenues of approximately $158 billion for 2020, indicating growth of 53% and earnings per share in the range of $18.3-$18.6, suggestive of 37.3% growth from the respective reported 2019 baselines.
Year to date, the stock has declined 1.5% against its industry’s growth of 8.8%.
Other stocks in the same space include UnitedHealth Group Inc. (UNH - Free Report) ), Humana Inc. (HUM - Free Report) and Molina Healthcare Inc. (MOH - Free Report) , which have gained 18.2%, 18% and 58.8% over the same time frame.
Cigna carries a Zacks Rank #3 (Hold), currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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