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Cigna (CI) Adds $10B to Buyback Funds, Turns to Bolt-On Buyouts
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The Cigna Group (CI - Free Report) recently announced that the company has added a massive $10 billion to its share buyback program. This brings the total repurchase fund to $11.3 billion. It aims to buy back a minimum of $5 billion worth of shares by first-half 2024-end. In the first quarter of 2024, it intends to execute a part of the repurchase through an accelerated share repurchase program.
It has also reiterated 2023 adjusted income of at least $24.75 per share and expects the metric to reach a minimum of $28 in 2024. Looking ahead, Cigna expects to maintain average annual adjusted EPS growth within 10-13% in the long term.
In 2024, the company is projected to allocate the majority of its discretionary cash flow toward share buybacks. Earlier, it stated that operating cash flow was forecasted to be a minimum of $10.5 billion in 2023. Over the 2022-2026 period, management expected CI to generate operating cash flows of roughly $50 billion.
Its strong cash-generating ability is expected to enable the company to continue its shareholder value-boosting efforts. During the Jan 1-Nov 1 period of 2023, Cigna bought back 7.7 million shares for around $2.2 billion.
It also pointed out that the company will assess bolt-on acquisition opportunities, along with “value-enhancing divestitures.” The decision comes at a time when its merger plan with Humana reportedly fell apart due to disagreement regarding the price. Per a Wall Street Journal report, the companies were looking at a cash-and-stock deal that stirred both investor interest and concerns due to the complexities involved, including anticipated regulatory scrutiny.
Cigna and HUM are major players in the market and their potential merger could have strengthened the combined entity's competitiveness against larger rivals. Healthcare economist Craig Garthwaite of Northwestern University, as reported by Reuters, noted that divesting Cigna's Medicare Advantage business could have minimized operational overlap between the two companies, potentially enhancing the prospects of the merger deal.
Price Performance
Shares of Cigna have declined 23.7% in the past year compared with the 3.6% fall of the industry it belongs to.
The Zacks Consensus Estimate for Enovis’ current-year earnings implies a 4.9% increase from the year-ago reported figure. The consensus mark for its current-year revenues is pegged at $1.7 billion. ENOV beat earnings estimates in all the last four quarters, with an average surprise of 11%.
The Zacks Consensus Estimate for Centene’s 2023 earnings indicates a 15.2% year-over-year increase to $6.66 per share. It has witnessed one upward estimate revision over the past 30 days against no movement in the opposite direction. The consensus mark for CNC’s 2023 revenues indicates 4.4% growth from a year ago.
The Zacks Consensus Estimate for Motus GI’s 2023 bottom line suggests a 67.2% year-over-year improvement. MOTS has witnessed one upward estimate revision over the past 30 days against no movement in the opposite direction. It beat earnings estimates in all the last four quarters, with an average surprise of 40.2%.
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Cigna (CI) Adds $10B to Buyback Funds, Turns to Bolt-On Buyouts
The Cigna Group (CI - Free Report) recently announced that the company has added a massive $10 billion to its share buyback program. This brings the total repurchase fund to $11.3 billion. It aims to buy back a minimum of $5 billion worth of shares by first-half 2024-end. In the first quarter of 2024, it intends to execute a part of the repurchase through an accelerated share repurchase program.
It has also reiterated 2023 adjusted income of at least $24.75 per share and expects the metric to reach a minimum of $28 in 2024. Looking ahead, Cigna expects to maintain average annual adjusted EPS growth within 10-13% in the long term.
In 2024, the company is projected to allocate the majority of its discretionary cash flow toward share buybacks. Earlier, it stated that operating cash flow was forecasted to be a minimum of $10.5 billion in 2023. Over the 2022-2026 period, management expected CI to generate operating cash flows of roughly $50 billion.
Its strong cash-generating ability is expected to enable the company to continue its shareholder value-boosting efforts. During the Jan 1-Nov 1 period of 2023, Cigna bought back 7.7 million shares for around $2.2 billion.
It also pointed out that the company will assess bolt-on acquisition opportunities, along with “value-enhancing divestitures.” The decision comes at a time when its merger plan with Humana reportedly fell apart due to disagreement regarding the price. Per a Wall Street Journal report, the companies were looking at a cash-and-stock deal that stirred both investor interest and concerns due to the complexities involved, including anticipated regulatory scrutiny.
Cigna and HUM are major players in the market and their potential merger could have strengthened the combined entity's competitiveness against larger rivals. Healthcare economist Craig Garthwaite of Northwestern University, as reported by Reuters, noted that divesting Cigna's Medicare Advantage business could have minimized operational overlap between the two companies, potentially enhancing the prospects of the merger deal.
Price Performance
Shares of Cigna have declined 23.7% in the past year compared with the 3.6% fall of the industry it belongs to.
Image Source: Zacks Investment Research
Zacks Rank and Key Picks
Cigna currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the medical space are Enovis Corporation (ENOV - Free Report) , Centene Corporation (CNC - Free Report) and Motus GI Holdings, Inc. (MOTS - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Enovis’ current-year earnings implies a 4.9% increase from the year-ago reported figure. The consensus mark for its current-year revenues is pegged at $1.7 billion. ENOV beat earnings estimates in all the last four quarters, with an average surprise of 11%.
The Zacks Consensus Estimate for Centene’s 2023 earnings indicates a 15.2% year-over-year increase to $6.66 per share. It has witnessed one upward estimate revision over the past 30 days against no movement in the opposite direction. The consensus mark for CNC’s 2023 revenues indicates 4.4% growth from a year ago.
The Zacks Consensus Estimate for Motus GI’s 2023 bottom line suggests a 67.2% year-over-year improvement. MOTS has witnessed one upward estimate revision over the past 30 days against no movement in the opposite direction. It beat earnings estimates in all the last four quarters, with an average surprise of 40.2%.