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Will Cigna (CI) Keep the Beat Streak Alive in Q2 Earnings?

Zacks Equity Research

Cigna Corp. CI is set to report second-quarter 2020 results on Jul 30, before the opening bell.

In the first quarter, the company’s earnings beat estimates by 5.63% on higher revenues in all three segments, namely Health Services, Integrated Medical and International.

Factors Likely to Impact Q2 Results

The rising unemployment rate is likely to have caused disenrollment within the company’s commercial customers, both in its Integrated Medical and Health Service businesses. Besides, Group Disability business might have been dragged down.  

The Zacks Consensus Estimate for Health Service revenues is pegged at $26.55 billion, indicating a 5.1% decrease from the year-ago reported figure.

On first-quarter conference call, management had informed that it continues to expect strong volume growth this year in Pharmacy Services, Specialty Pharmacy Care and in Medicare Advantage along with expense efficiencies.

With regard to medical cost, the company is expected to have seen impacts from elevated COVID-19 claims cost, which might have been offset by lower medical cost from deferred procedures.

The quarterly progression of earnings within Integrated Medical is likely to have varied from its historical patterns with lower utilization expected in the second quarter and increased services in the second half of 2020.  This, in turn, is expected to have aided the segmental margins.This, in turn, is expected to have aided the segmental margins. The Zacks Consensus Estimate for pre-tax adjusted income from operations at this segment is pegged at $1.19 billion, suggesting a 20.6% rise from the year ago reported figure.

The company has also been investing in innovation and digital capabilities to better serve customers and clients. This might have escalated costs in the to-be-reported quarter.

Earnings Surprise

The company boasts a decent earnings surprise history. Its bottom line surpassed estimates in each of the trailing four quarters, the average being 6.92%. This is depicted in the graph below:

Cigna Corporation Price and EPS Surprise

Cigna Corporation Price and EPS Surprise
Cigna Corporation Price and EPS Surprise

Cigna Corporation price-eps-surprise | Cigna Corporation Quote

What Our Model Says

Our proven model predicts an earnings beat for Cigna this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a positive surprise.

Earnings ESP: Cigna has an Earnings ESP of +2.68%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Currently, Cigna carries a Zacks Rank #2 (Buy).

Other Stocks Worth a Look

Here are a few other healthcare stocks worth considering from the same space as these too have the right combination of elements to beat on earnings in the upcoming quarterly results.

CareDx, Inc. CDNA has a Zacks Rank #3 and an Earnings ESP of +68.42%, currently. Its earnings growth rate is envisioned at 13.33% for the second quarter.

AstraZeneca PLC AZN has a Zacks Rank of 3 and an Earnings ESP of +1.52%, presently.  Its earnings growth rate is envisioned at 13.33% for the second quarter.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Molina Healthcare, Inc. MOH has an Earnings ESP of +4.08% and a Zacks Rank of 2, presently. It has an earnings growth prediction of 2.94% for the second quarter.

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AstraZeneca PLC (AZN) : Free Stock Analysis Report
 
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