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Can Cigna (CI) Beat Q2 Earnings on Growing Pharmacy Revenues?
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The Cigna Group (CI - Free Report) is slated to report second-quarter 2024 results on Aug 1, 2024, before the opening bell.
The Zacks Consensus Estimate for Cigna’s second-quarter earnings per share is pegged at $6.42, which indicates growth of 4.7% from the prior-year quarter’s reported figure. The estimate decreased 5 cents in the past 60 days. The consensus mark for revenues is pegged at $58.5 billion, indicating 20.3% growth from the year-ago quarter’s reported number.
Image Source: Zacks Investment Research
Cigna boasts a solid earnings surprise history. Its bottom line beat estimates in each of the trailing four quarters, the average surprise being 3.3%. This is depicted in the figure below:
Our proven model predicts a likely earnings beat for Cigna this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is precisely the case here.
Earnings ESP: Cigna has an Earnings ESP of +1.59% as the Most Accurate Estimate of $6.52 per share is currently pegged higher than the Zacks Consensus Estimate of $6.42. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: CI currently carries a Zacks Rank of 2.
Factors to Note
Cigna's second-quarter results are expected to be positively influenced by enhanced performances in the Evernorth and Cigna Healthcare segments. The company is expected to have gained from an expanding customer base, especially in the Middle Market space and the growth in specialty pharmacy services in the quarter under review.
The Zacks Consensus Estimate and our model estimate for pharmacy revenues suggest a rise of 26.9% and 24%, respectively, from the year-ago quarter’s actuals. The consensus mark for fees and other revenues and premiums indicates 6.7% and 5.4% year-over-year growth, respectively.
The consensus mark for Evernorth’s revenues indicates a 24% year-over-year jump, whereas our model predicts an 18.7% increase. The consensus mark for Cigna Healthcare’s revenues indicates a rise of 4% from the year-ago period. Moreover, the Zacks Consensus Estimate for net investment income suggests nearly 3.4% growth from the year-ago period. The factors stated above are likely to have positioned the company for year-over-year revenue growth in the second quarter.
However, the Zacks Consensus Estimate for total medical customers indicates a 1.4% decrease from the year-ago period’s reported number. The consensus mark and our estimate for the second-quarter medical care ratio indicate 100 basis points (bps) and 150 bps year-over-year deterioration, respectively.
We expect total Benefits and Expenses in the quarter to have increased more than 19% year over year due to higher pharmacy and other service costs, medical costs and other benefit expenses.
Price Performance
Shares of Cigna have gained 15.8%, outperforming the industry’s rise of 5.9% in the year-to-date period. The stock also outperformed its sector and the S&P 500 Composite, which increased 5.9% and 14.8%, respectively, during the same time frame.
YTD Price Performance
Image Source: Zacks Investment Research
Conclusion
Rising premiums, net investment income, and growth in specialty pharmacy services are likely to have offset the negative impact of rising expenses, resulting in an earnings beat in the second quarter.
Other Stocks That Warrant a Look
Here are some other companies worth considering from the broader Medical space, as our model shows that these, too, have the right combination of elements to beat on earnings this time around:
The Zacks Consensus Estimate for Cencora’s bottom line for the to-be-reported quarter indicates an 8.9% year-over-year improvement. The estimate remained stable over the past week. The consensus mark for COR’s revenues is pegged at nearly $73.6 billion for the quarter.
United Therapeutics Corporation (UTHR - Free Report) has an Earnings ESP of +2.27% and a Zacks Rank #2.
The Zacks Consensus Estimate for United Therapeutics' bottom line for the to-be-reported quarter indicates a 19.5% year-over-year improvement. UTHR beat earnings estimates in each of the past four quarters, with an average surprise of 12.4%.
Encompass Health Corporation (EHC - Free Report) has an Earnings ESP of +0.36% and is a Zacks #3 Ranked player.
The Zacks Consensus Estimate for Encompass Health’s earnings per share for the to-be-reported quarter is pegged at $1.01 per share, indicating a rise of 6.3% year over year. EHC beat earnings estimates in each of the past four quarters, the average surprise being 18.7%.
Image: Bigstock
Can Cigna (CI) Beat Q2 Earnings on Growing Pharmacy Revenues?
The Cigna Group (CI - Free Report) is slated to report second-quarter 2024 results on Aug 1, 2024, before the opening bell.
The Zacks Consensus Estimate for Cigna’s second-quarter earnings per share is pegged at $6.42, which indicates growth of 4.7% from the prior-year quarter’s reported figure. The estimate decreased 5 cents in the past 60 days. The consensus mark for revenues is pegged at $58.5 billion, indicating 20.3% growth from the year-ago quarter’s reported number.
Image Source: Zacks Investment Research
Cigna boasts a solid earnings surprise history. Its bottom line beat estimates in each of the trailing four quarters, the average surprise being 3.3%. This is depicted in the figure below:
Cigna Group Price and EPS Surprise
Cigna Group price-eps-surprise | Cigna Group Quote
Earnings Whispers
Our proven model predicts a likely earnings beat for Cigna this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is precisely the case here.
Earnings ESP: Cigna has an Earnings ESP of +1.59% as the Most Accurate Estimate of $6.52 per share is currently pegged higher than the Zacks Consensus Estimate of $6.42. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: CI currently carries a Zacks Rank of 2.
Factors to Note
Cigna's second-quarter results are expected to be positively influenced by enhanced performances in the Evernorth and Cigna Healthcare segments. The company is expected to have gained from an expanding customer base, especially in the Middle Market space and the growth in specialty pharmacy services in the quarter under review.
The Zacks Consensus Estimate and our model estimate for pharmacy revenues suggest a rise of 26.9% and 24%, respectively, from the year-ago quarter’s actuals. The consensus mark for fees and other revenues and premiums indicates 6.7% and 5.4% year-over-year growth, respectively.
The consensus mark for Evernorth’s revenues indicates a 24% year-over-year jump, whereas our model predicts an 18.7% increase. The consensus mark for Cigna Healthcare’s revenues indicates a rise of 4% from the year-ago period. Moreover, the Zacks Consensus Estimate for net investment income suggests nearly 3.4% growth from the year-ago period. The factors stated above are likely to have positioned the company for year-over-year revenue growth in the second quarter.
However, the Zacks Consensus Estimate for total medical customers indicates a 1.4% decrease from the year-ago period’s reported number. The consensus mark and our estimate for the second-quarter medical care ratio indicate 100 basis points (bps) and 150 bps year-over-year deterioration, respectively.
We expect total Benefits and Expenses in the quarter to have increased more than 19% year over year due to higher pharmacy and other service costs, medical costs and other benefit expenses.
Price Performance
Shares of Cigna have gained 15.8%, outperforming the industry’s rise of 5.9% in the year-to-date period. The stock also outperformed its sector and the S&P 500 Composite, which increased 5.9% and 14.8%, respectively, during the same time frame.
YTD Price Performance
Image Source: Zacks Investment Research
Conclusion
Rising premiums, net investment income, and growth in specialty pharmacy services are likely to have offset the negative impact of rising expenses, resulting in an earnings beat in the second quarter.
Other Stocks That Warrant a Look
Here are some other companies worth considering from the broader Medical space, as our model shows that these, too, have the right combination of elements to beat on earnings this time around:
Cencora, Inc. (COR - Free Report) has an Earnings ESP of +1.01% and is a Zacks #3 Ranked player. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Cencora’s bottom line for the to-be-reported quarter indicates an 8.9% year-over-year improvement. The estimate remained stable over the past week. The consensus mark for COR’s revenues is pegged at nearly $73.6 billion for the quarter.
United Therapeutics Corporation (UTHR - Free Report) has an Earnings ESP of +2.27% and a Zacks Rank #2.
The Zacks Consensus Estimate for United Therapeutics' bottom line for the to-be-reported quarter indicates a 19.5% year-over-year improvement. UTHR beat earnings estimates in each of the past four quarters, with an average surprise of 12.4%.
Encompass Health Corporation (EHC - Free Report) has an Earnings ESP of +0.36% and is a Zacks #3 Ranked player.
The Zacks Consensus Estimate for Encompass Health’s earnings per share for the to-be-reported quarter is pegged at $1.01 per share, indicating a rise of 6.3% year over year. EHC beat earnings estimates in each of the past four quarters, the average surprise being 18.7%.
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