Here's Why You Should Hold on to Cigna (CI) Stock for Now
Cigna Corporation CI is gaining momentum on the back of well-performing growth platforms, several collaborations, improving Medicare membership and solid capital position. A solid 2021 guidance further reinstates growth prospects of the stock.
Zacks Rank & Price Performance
Cigna carries a Zacks Rank #3 (Hold), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The stock has gained 30.8% in a year compared with the industry’s rally of 34.5%.
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Style Score
The company is well-poised for progress, as evident from its favorable VGM Score of B. Here V stands for Value, G for Growth and M for Momentum, with the score being a weighted combination of all three factors.
It has an impressive Value Score of A, which reflects an attractive valuation of the stock.
Robust Prospects
The Zacks Consensus Estimate for the company’s 2021 earnings reflect improvement of 10.8% from the prior-year’s reported figure. The consensus mark for 2021 revenues indicates growth of 3.9% from the year-ago reported figure.
Positive Estimate Revision
The Zacks Consensus Estimate for 2021 earnings has been revised north by 0.7% in the past 60 days.
Impressive Earnings Surprise History
Cigna outpaced estimates in three of the trailing four quarters and missed once, the average surprise being 5.43%.
Solid 2021 Guidance
Concurrent with first-quarter 2021 results, the healthcare provider hiked its 2021 business outlook. Revenues are now projected at a minimum of $166 billion versus the previous guidance of “at least $165 billion.” The revised guidance indicates rise of 3.7% from the 2020-end reported figure.
Adjusted income from operations per share is now forecast at a minimum of $20.20, up from the previous guidance “at least $20.” The new guidance suggests growth of 9.5% from the reported figure at 2020 end.
Other healthcare providers such as UnitedHealth Group Incorporated UNH, Molina Healthcare, Inc. MOH and Tenet Healthcare Corporation THC have upped their earnings guidance for 2021 as well.
Business Tailwinds
The company’s revenues have been receiving a boost on the back of its well-performing growth platforms Evernorth, U.S. Medical and International Markets. Time and again, it has pursued several buyouts and collaborations to roll out cost-effective solutions and address whole-person needs. For more than a decade, the healthcare provider has maintained a track record of reporting average annual adjusted EPS growth higher than the long-term target of 10% to 13%.
Further, a diversified healthcare portfolio and well-established global presence has been fetching higher members for Cigna. In its Commercial business, the company intends to extend U.S. presence and bolster its competitive footprint by 25% through 2025. This year, the total medical customers of the company are anticipated at a minimum of 350,000 customers, higher from the previous guidance of “at least 325,000 customers.” Besides, it has a solid Medicare Advantage business in place through which it intends to serve 50% of Medicare eligibles within 2025.
Moreover, the healthcare provider boasts of robust cash generation abilities, which have helped it in pursuing several growth-related efforts and prudently deploying capital. Over the 2021-2025 period, the average annual deployment for share buybacks, dividends and, mergers and acquisitions (M&A) is projected to be around $8 billion. Its leverage ratio of 39.9% at first-quarter end remained within the company’s long-term target debt-to-capitalization of less than 40%.
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