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Cigna (CI) to Report Q3 Earnings: What's in the Offing?

Zacks Equity Research

Cigna Corp. CI will release third-quarter 2019 results on Oct 31, before market open.

The Zacks Consensus Estimate for the company’s earnings per share is pegged at $4.37, indicating an increase of 13.8% from the year-ago quarter reported figure. The consensus mark for revenues is pegged at $34.1 billion, suggesting an increase of 198% from the year-ago quarter reported figure.

In the last reported quarter, Cigna’s earnings of $4.3 per share beat the Zacks Consensus Estimate by 15.3% and grew 10.5% year over year, led by accretion from Express Scripts acquisition.

Factors at Play

Cigna’s Integrated Medical segment is likely to have driven revenues on customer growth, deepening of customer relationships, premium growth reflecting underlying cost trends, and the inclusion of Express Scripts and Medicare Part D business. The segment is likely to have seen an increase in global medical customers, led by growth in select and middle market segments.

In the company’s Health Services segment, earnings are likely to have benefited from organic growth due to the addition of new pharmacy customers, strong volumes of adjusted pharmacy scripts fulfilled and continued improvement in specialty pharmacy.

The company’s International business is expected to have benefited from business growth and strong margins, partially offset by unfavorable foreign currency impacts.

Group Disability and Life business is likely to have witnessed growth owing to solid performance in disability and life.

Overall third-quarter earnings are likely to have gained from strong medical and specialty contributions and continued effective medical cost management.

Medical cost ratio (MCR), which measures cost to revenues, is likely to have increased year over year in the quarter under review, driven by the inclusion of Express Scripts and Medicare Part D business, the pricing effect due to the suspension of health insurance tax, and a higher MCR in its individual business.

Cigna’s debt levels are likely to have declined in the third quarter, as it prioritizes to repay debt that was taken to fund the purchase of Express Scripts. Share repurchases made by the company during the third quarter are likely to have aided the bottom line.

Earnings Surprise

The company boasts an attractive earnings surprise history, having surpassed estimates in three of the four reported quarters with an average positive surprise of 7.02%. This is depicted in the graph below:

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 does not conclusively predict 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 an earnings beat. But that’s not the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -0.82%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter

Zacks Rank: Currently, the company carries a Zacks Rank #3.

Stocks Worth a Look

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

Amgen Inc. AMGN has an Earnings ESP of +0.04% and a Zacks Rank of 3.

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

ACADIA Pharmaceuticals Inc. ACAD has an Earnings ESP of +5.44% and a Zacks Rank 3.

Mednax Inc. MD has an Earnings ESP of +1.1% and carries a Zacks #3.

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Cigna Corporation (CI) : Free Stock Analysis Report
 
Amgen Inc. (AMGN) : Free Stock Analysis Report
 
ACADIA Pharmaceuticals Inc. (ACAD) : Free Stock Analysis Report
 
Mednax, Inc (MD) : Free Stock Analysis Report
 
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