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Here's Why Investors Should Hold Cigna (CI) Stock for Now
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The Cigna Group (CI - Free Report) continues to be aided by two solid growth platforms, acquisitions and a solid financial position. A solid 2023 guidance also acts as an additional tailwind for the stock.
Zacks Rank & Price Performance
Cigna presently carries a Zacks Rank #3 (Hold).
The stock has gained 5.2% in the past month compared with the industry’s 3.2% growth. The Finance sector and the S&P Index have gained 3.6% and 5%, respectively, in the past month.
Image Source: Zacks Investment Research
Favorable Style Score
CI is well-poised for progress, as evidenced by its impressive VGM Score of A. Here V stands for Value, G for Growth and M for Momentum. The score is a weighted combination of all three factors.
Solid Surprise History
Cigna’s earnings outpaced estimates in each of the trailing four quarters, the average being 6.6%.
Robust Growth Prospects
The Zacks Consensus Estimate for CI’s 2023 earnings is pegged at $24.81 per share, indicating an improvement of 6.6% from the year-earlier reading, while the same for revenues stands at $188.9 billion, implying a 4.6% increase from the prior-year actual.
The consensus mark for 2024 earnings is pegged at $28.27 per share, suggesting 13.9% growth from the 2023 estimate. The same for revenues stands at $225.5 billion, which indicates a rise of 19.4% from the 2023 estimate.
Optimist Guidance for 2023
This year, Cigna anticipates adjusted revenues at a minimum of $188 billion, which indicates growth of at least 4.1% from the 2022 reported figure.
Adjusted earnings per share are predicted to be a minimum of $24.70, which suggests minimum growth of 6.1% from the 2022 figure.
Business Tailwinds
Cigna derives a majority of its revenues from premiums and pharmacy services. A rising customer base also enhances premiums, which remains the most significant revenue-generation component for any health insurer like Cigna. The company expects medical customers to grow by at least 1.3 million customers in 2023. Express Risk, Cigna’s pharmacy benefits business, should continue to drive pharmacy revenues by the strength of its supply chain, care and clinical management programs.
Cigna’s performance continues to benefit from the strength of its two growth platforms, namely Evernorth and Cigna Healthcare. A solid specialty pharmacy services suite drives the growth of the Evernorth platform, while the Cigna Healthcare unit benefits from an expansive customer base within its U.S. Government and U.S. Commercial businesses.
The U.S. Commercial business should benefit from its competitive position and strong customer growth. U.S. Government business and International business should continue their growth trajectory with high-quality plans and geographic expansion. An aging U.S. population is expected to sustain the solid demand for its Medicare plans, which falls under the Government business.
In addition to the solid inflow of premiums, the Cigna Healthcare unit benefits from continuous product expansions and new collaborations or contract extensions with renowned healthcare systems.
CI resorts to acquisitions to bolster its suite of solutions and capabilities, as well as step into newer geographies and solidify its presence in existing markets. The company is on track to implement its Centene contract beginning in 2024. Cigna’s collaboration with VillageMD should act as a catalyst for its value-based care programs in the future. This would add to its existing offerings and benefit Cigna Healthcare and Evernorth’s clients.
A growing cash balance and robust cash-generating abilities will continue to empower Cigna in undertaking business growth investments and prudently deploying capital via share repurchases and dividend payments. In February 2023, management approved a 10% hike in the quarterly dividend. The company expects to generate an operating cash flow of at least $9 billion in 2023.
Key Concerns
There are a few factors that have been impeding the stock’s growth lately.
The company has been experiencing an increase in pharmacy and other service costs, medical costs and other benefit expenses. Such costs tend to weigh on the company’s margins. Its high leverage also poses a concern for shareholders. Nevertheless, we believe that a systematic and strategic plan of action will drive growth in the long term.
Assurant’s bottom line outpaced estimates in three of the trailing four quarters and missed once. The average earnings surprise is 18.2%.
The Zacks Consensus Estimate for AIZ’s 2023 earnings indicates a 22.1% rise, while the same for revenues suggests 2.7% growth from the prior-year reported figures.
The bottom line of Enact Holdings outpaced the Zacks Consensus Estimate inthree of the last four quarters and missed on the other occasion, the average surprise being 28.6%.
The consensus mark for ACT’s 2023 earnings has moved 8.9% north in the past 60 days.
Old Republic’s bottom line outpaced estimates in each of the trailing four quarters. The average earnings surprise is 29.9%.
The consensus mark for ORI’s 2023 earnings has moved 9.1% north in the past 60 days.
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Here's Why Investors Should Hold Cigna (CI) Stock for Now
The Cigna Group (CI - Free Report) continues to be aided by two solid growth platforms, acquisitions and a solid financial position. A solid 2023 guidance also acts as an additional tailwind for the stock.
Zacks Rank & Price Performance
Cigna presently carries a Zacks Rank #3 (Hold).
The stock has gained 5.2% in the past month compared with the industry’s 3.2% growth. The Finance sector and the S&P Index have gained 3.6% and 5%, respectively, in the past month.
Image Source: Zacks Investment Research
Favorable Style Score
CI is well-poised for progress, as evidenced by its impressive VGM Score of A. Here V stands for Value, G for Growth and M for Momentum. The score is a weighted combination of all three factors.
Solid Surprise History
Cigna’s earnings outpaced estimates in each of the trailing four quarters, the average being 6.6%.
Robust Growth Prospects
The Zacks Consensus Estimate for CI’s 2023 earnings is pegged at $24.81 per share, indicating an improvement of 6.6% from the year-earlier reading, while the same for revenues stands at $188.9 billion, implying a 4.6% increase from the prior-year actual.
The consensus mark for 2024 earnings is pegged at $28.27 per share, suggesting 13.9% growth from the 2023 estimate. The same for revenues stands at $225.5 billion, which indicates a rise of 19.4% from the 2023 estimate.
Optimist Guidance for 2023
This year, Cigna anticipates adjusted revenues at a minimum of $188 billion, which indicates growth of at least 4.1% from the 2022 reported figure.
Adjusted earnings per share are predicted to be a minimum of $24.70, which suggests minimum growth of 6.1% from the 2022 figure.
Business Tailwinds
Cigna derives a majority of its revenues from premiums and pharmacy services. A rising customer base also enhances premiums, which remains the most significant revenue-generation component for any health insurer like Cigna. The company expects medical customers to grow by at least 1.3 million customers in 2023. Express Risk, Cigna’s pharmacy benefits business, should continue to drive pharmacy revenues by the strength of its supply chain, care and clinical management programs.
Cigna’s performance continues to benefit from the strength of its two growth platforms, namely Evernorth and Cigna Healthcare. A solid specialty pharmacy services suite drives the growth of the Evernorth platform, while the Cigna Healthcare unit benefits from an expansive customer base within its U.S. Government and U.S. Commercial businesses.
The U.S. Commercial business should benefit from its competitive position and strong customer growth. U.S. Government business and International business should continue their growth trajectory with high-quality plans and geographic expansion. An aging U.S. population is expected to sustain the solid demand for its Medicare plans, which falls under the Government business.
In addition to the solid inflow of premiums, the Cigna Healthcare unit benefits from continuous product expansions and new collaborations or contract extensions with renowned healthcare systems.
CI resorts to acquisitions to bolster its suite of solutions and capabilities, as well as step into newer geographies and solidify its presence in existing markets. The company is on track to implement its Centene contract beginning in 2024. Cigna’s collaboration with VillageMD should act as a catalyst for its value-based care programs in the future. This would add to its existing offerings and benefit Cigna Healthcare and Evernorth’s clients.
A growing cash balance and robust cash-generating abilities will continue to empower Cigna in undertaking business growth investments and prudently deploying capital via share repurchases and dividend payments. In February 2023, management approved a 10% hike in the quarterly dividend. The company expects to generate an operating cash flow of at least $9 billion in 2023.
Key Concerns
There are a few factors that have been impeding the stock’s growth lately.
The company has been experiencing an increase in pharmacy and other service costs, medical costs and other benefit expenses. Such costs tend to weigh on the company’s margins. Its high leverage also poses a concern for shareholders. Nevertheless, we believe that a systematic and strategic plan of action will drive growth in the long term.
Stocks to Consider
Some better-ranked stocks from the Multi-line Insurance space are Assurant, Inc. (AIZ - Free Report) , Enact Holdings, Inc. (ACT - Free Report) and Old Republic International Corporation (ORI - Free Report) . Each of these companies currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Assurant’s bottom line outpaced estimates in three of the trailing four quarters and missed once. The average earnings surprise is 18.2%.
The Zacks Consensus Estimate for AIZ’s 2023 earnings indicates a 22.1% rise, while the same for revenues suggests 2.7% growth from the prior-year reported figures.
The bottom line of Enact Holdings outpaced the Zacks Consensus Estimate inthree of the last four quarters and missed on the other occasion, the average surprise being 28.6%.
The consensus mark for ACT’s 2023 earnings has moved 8.9% north in the past 60 days.
Old Republic’s bottom line outpaced estimates in each of the trailing four quarters. The average earnings surprise is 29.9%.
The consensus mark for ORI’s 2023 earnings has moved 9.1% north in the past 60 days.