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Cigna Corporation (CI)

NYSE - Nasdaq Real Time Price. Currency in USD
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216.40+0.17 (+0.08%)
At close: 4:00PM EDT
217.20 +0.80 (+0.37%)
After hours: 06:18PM EDT
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  • s
    serkan
    Yes yes! For 1 week I was writing about this moment. Finally the push came and on the 6th try we brake the MA50 resistance. Looking at fibo levels 1st target 216.5$ and then 220$ in sight. Above 220 will depend on the earnings release that is coming up in 2 weeks which I expect positive results. So will not be a surprise if we see 240s before year end
  • s
    serkan
    5 day we tested MA50 and so far again we are rejected. Standing behind my earlier statement, if we can break up the MA50 resistance, the road ahead will be much positive but I guess all the algorithm trading is wired to sell at MA50 and buy at MA21 so we oscillate in between. Seems we have to wait for earnings release
    Bullish
  • G
    GNOME ON THE RANGE
    It is always nice to pick up those gems that have an attractive valuation, CI has been on my wish/watch list since spring. This was a good week to start a position (Tuesday), however, I wish it were larger. I only bought 125 shares, I typically only buy small lots over several days and it works about 80% of the time. Great board though, lots of useful info, thanks, and good luck & great investing.
  • s
    serkan
    finally we broke up on MA21 daily average but got rejected by MA50. If we can push above MA50 this week, we should easily climb back up to 220s. I expect good results on earnings report on 4th Nov. Let`s see how it goes.
  • b
    bob
    Big boys loaded
    CI Jan 21 2022 $210/$215 Calls yesterday guys!!!!!!!!
  • v
    violet
    Are EPS estimates for 2022 too conservative?!

    Let’s revisit.

    Cigna guided to at least $20.20 for 2021 and at least 10% higher in 2022…implying $22.22.

    But the 2021 EPS figure was based on a avg FD share count of 344-345 mil. FD shares were around 340 mil at the time of the 10Q filing, however. With the $2 bil ASR that should fall by 9.5-10 mil going into 2022…so 330 mil. That by itself would add 60 cents to full year 2022 EPS (and 15 cents to 2021). Plus, Cigna assumes it will recover $1.00 of covid related EPS in 2022. So those items by themselves bring 2022 EPS up by $1.60 (out of the $2.02 assumed in guidance). Plus Cigna is calling for growth in both its medical business and Evernorth, with margin/efficiency improvements expected (as per the Morgan Stanley conference presentation). Plus, there will be additional shares repurchased in 2022…which will be additionally highly accretive to EPS. Plus, the sale of the international non-core business will likely be neutral to EPS (but result in another $5 bil in buybacks).

    So overall $10 bil in buybacks (15%+ of the current mkt cap)!

    And unless the core business is down in 2022 Cigna should easily meet the $22.22 EPS number it guided to and very likely HANDILY exceed it. I am at $23.50-24 for 2022…just assuming moderate core growth and continued buybacks.

    All thoughts welcome on my math or otherwise.
  • v
    violet
    Deal to sell parts of Int’l is smart. $5+ bil in buybacks with the proceeds. Combined with another $4-5 bil in expected buybacks from FCF and Cigna will retire another 15% or so of its share count by year end 2022. The businesses sold were non-core, although pretty profitable. Assuming $10 bil in buybacks Cigna’s share count will shrink to 280-290 mil by yr end 2022. That’s roughly 90-100 mil shares less (25-30% less) than shares outstanding after the closing of the Express Scripts deal and debt is down by $10 bil as well. Ultimately 2023 EPS will be $26-27…and the stock will be at $300 within 18-24 months.
  • v
    violet
    So far UNH and ANTM posted better than expected EPS, driven partly by a lower MLR as non-covid utilization surprised favorably, more than offsetting higher covid costs. Cash flow was also very strong for both.

    Can we anticipate the same for Cigna? In September the company presented at the MS conference and called out industry trends that included higher covid cases but lower non-covid utilization. Cigna also reiterated its 2021 and 2022 earnings targets.

    I think shorts need to start worrying here. If Cigna beats on MLR, produces strong FCF, at least reiterates EPS targets, and nothing stupid comes out of Congress we may get a pretty powerful move to the upside in the stock.

    At 9.5X somewhat depressed 2022 EPS with 15% of the shares outstanding likely to be repurchased in 2022 the stock is still a bargain.
  • C
    C
    I saw 4 valuations Attrix, GuruForce etc based on FCF... all shows above $300 price...and stock is at $199. Funny d way momentum works over Fundamental.... any thoughts ?
    Bullish
  • v
    violet
    CEO David Cordani at the Morgan Stanley Healthcare Conference on September 14…

    “…the portfolio will grow as we step into 2022, again, we’ll see margin expansion opportunity relative to the underlying risk business in the portfolio. And we’ll see productivity gains additionally within our portfolio.”

    “And I think putting 2022 in context of our historic performance, we have a decade track record of delivering, on average, between 10% and 13% EPS growth for the franchise. And 2022 will be another year where there will be attractive organic earnings performance and very attractive capital deployment.”

    “As we step into 2022,…it’s demonstrating that 2022 will be another year of attractive growth. Attractive growth in terms of our earnings growth in the organization as we continue to make targeted investments within our portfolio organically.”
  • v
    violet
    BofA downgrade is a buying opportunity! Analyst’s rationale is he is not sure about earnings visibility due to a bit of confusion around guidance provided on the 2Q call and likely higher 3q/4q medical costs. CI just reiterated guidance a week ago and the ASR should add some cushion to that given the healthy 60 cents of annual EPS accretion from buying in 3% of the FD OS in one quarter. So there is upside to his numbers, in contrast to what he says in his note.

    On top of that, he says 10X is the right multiple for the business because it is somewhat slower growing and that has been the avg multiple since the Express Scripts deal was announced. More poor logic here. Cigna’s business is much less capital intensive as it’s 70+% services and 80% ASO in the MCO space. That allows for 10-13% EPS growth when including reinvestment of FCF, on par with other MCOs. Why is 10X the right multiple for a capital light FCF machine that grows earnings HSD organically? CI said it will generate $50 bil in operating cash flow in the 2021-2025 timeframe. That’s relative to the current $68 bil mkt cap…pretty compelling.

    Who cares if 3q/4q have higher medical costs?! It means little when focusing on the intermediate term earnings power of the business as pricing/plan structures can be adjusted for 2022 and beyond to incorporate Covid related costs. Ultimately these are transitory headwinds that won’t affect 2023 earnings (my EPS estimate is $27 assuming 310 mil shares vs 330 mil shares post ASR completion). Put 10x (even if that’s a conservative multiple)on that Kevin and you get $270.

    Underperform? Really? Seems like this guy’s analyst skills are underperforming since he was touting the stock $65 points higher.
  • D
    Doug
    Earning per share of 2.87 shows CI ability to generate Free Cash Flow in good time or bad time.
  • R
    Ron
    How can you go wrong with a Company, according to the synopsis here, founded in 1792.
  • D
    Dawid
    300 end of 2022
  • D
    Doug
    CI is likely to be bought out
    Bullish
  • B
    Bill Johnston
    CI getting crushed. Any news? Never mind. Here it is. BofA Securities Double-Downgrades Cigna to Underperform From Buy, Lowers PT to $225 From $240, Shares Lower Premarket
  • v
    violet
    $50 billion in expected operating cash flow ($40 billion in free cash flow) over the next 5 years vs. the current market cap of $70 billion is really compelling. Cigna plans to deploy an average of $8 billion per year to dividend, buybacks and some M&A. Assume $6 billion on average goes to buybacks and dividends…that is $18 per share in capital return, or roughly 9% of the current market cap. FCF yield today is 10%, growing to 15% by 2025. Cigna generated roughly $20 billion in cash flow during the past 2 years and retired roughly $10 billion in debt (also using proceeds from the Disability business sale). Most of the business is services, not insurance. Within the managed care portfolio 80% is in administrative (ASO) arrangements where Cigna does not bear underwriting risk. Estimates for Evernorth keep getting revised higher as that business is growing much faster than guidance. COVID is likely a very transitory headwind that is fully behind the company by 2023 (and partly by 2022). The company has the ability to reprice its insurance business every year as cost trends dictate. The accelerated share repurchase announced last week will take another 3% out of the share count immediately (equivalent to 60 cents in EPS accretion for 2022). How is this stock trading for less than 9X NTM EPS?!
  • d
    dyon z
    Haha ... Kevin Fischbeck of BofA sneezes and the market reacts. What sheep. Fischbeck "reversed" his position from "buy" to "underperform" ... merely based on Cigna's "lack of clarity" on earnings projections. But more amazing is that he simply moved his price evaluation from $240 to $225 .... And that warrants a double downgrade? ... when the stock is currently at 205 to 210? What a hack.
  • T
    TraderJeff
    Cigna would be in the 220’s this morning absent that bogus BofA downgrade .
  • v
    violet
    Morgan Stanley conference presentation yesterday was positive.

    Cigna’s CEO made it clear that the company would hit its guidance for $20.20+ in EPS in 2021…which means the next 2 quarters are somewhat derisked. The company also gave color on medical cost trends in 3Q…positively, non-Covid utilization is tracking BELOW baseline as the spike in Covid cases has limited capacity for procedures in the quarter. So although COVID-19 medical costs might be higher, there may be an offset in lower than expected non-Covid medical costs. Regardless…the franchise is diverse enough to enable Cigna to deliver on its financial commitments to investors for the year…that’s the takeaway!

    Similarly, Cigna sees 2022 as a very good year of growth for the franchise…at least 10%. That puts EPS at $22.20+…but realistically it could be much higher than that (as I previously walked through in my analysis).

    So the stock at $204 is at a measly 9.1X 2022E conservative EPS guidance. By the way, Morgan Stanley is a full $1+ ahead of this EPS estimate at $23.45 for 2022. MS is also $0.50 ahead of the $20.20+ EPS guidance for 2021…so it expects a beat on EPS relative to guidance/consensus in 2H 2021 as well.

    Cigna CEO David Cordani said the announced ASR was management’s way of signaling to the Street that it viewed the stock as undervalued. And he affirmed his $50 bil operating cash flow target for 2021-25.

    The stock is a BUY.
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