Yahoo Finance Cigna Corporation (NYSE:CI) Just Reported And Analysts Have Been Lifting Their Price Targets
Investors in Cigna Corporation (NYSE:CI) had a good week, as its shares rose 5.9% to close at US$267 following the release of its first-quarter results. The result was positive overall - although revenues of US$41b were in line with what the analysts predicted, Cigna surprised by delivering a statutory profit of US$3.30 per share, modestly greater than expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Cigna after the latest results.
See our latest analysis for Cigna
Taking into account the latest results, the consensus forecast from Cigna's 16 analysts is for revenues of US$166.9b in 2021, which would reflect a reasonable 2.3% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to nosedive 33% to US$15.64 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$165.8b and earnings per share (EPS) of US$15.69 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
With the analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 6.2% to US$286. It looks as though they previously had some doubts over whether the business would live up to their expectations. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Cigna, with the most bullish analyst valuing it at US$313 and the most bearish at US$230 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Cigna's revenue growth is expected to slow, with the forecast 3.1% annualised growth rate until the end of 2021 being well below the historical 37% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 6.9% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Cigna.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Cigna's revenues are expected to perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Cigna analysts - going out to 2025, and you can see them free on our platform here.
You still need to take note of risks, for example - Cigna has 3 warning signs we think you should be aware of.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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