The Cigna Group CI continues to be aided by two solid growth platforms, acquisitions and a solid financial position. A solid 2023 guidance also acts as an additional tailwind for the stock.
Zacks Rank & Price Performance
Cigna carries a Zacks Rank #3 (Hold) at present.
The stock has gained 4.4% in a year against the industry’s 6.4% decline. The Medical sector and the S&P Index have declined 17.6% and 14.6%, respectively, in the same time frame.
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Favorable Style Score
CI is well-poised for progress, as evidenced by its impressive VGM Score of A. Here V stands for Value, G for Growth and M for Momentum, and the score is a weighted combination of all three factors.
Robust Growth Prospects
The Zacks Consensus Estimate for CI’s 2023 earnings is pegged at $24.77 per share, indicating an improvement of 6.5% from the year-earlier reading, while the same for revenues stands at $187.7 billion, implying a 3.9% increase from the prior-year actual.
The consensus mark for 2024 earnings is pegged at $28.22 per share, suggesting 13.9% growth from the 2023 estimate. The same for revenues stands at $224.2 billion, which indicates a rise of 19.5% from the 2023 estimate.
Solid Surprise History
Cigna’s earnings outpaced estimates in each of the trailing four quarters, the average being 9.98%.
Optimist Guidance for 2023
This year, Cigna anticipates adjusted revenues at a minimum of $187 billion, which indicates growth of at least 3.5% from the 2022 reported figure.
Adjusted earnings per share are predicted to be a minimum of $24.60, which suggests minimum growth of 5.7% from the 2022 figure.
Cigna’s performance continues to benefit from the strength exhibited by its two growth platforms, namely Evernorth and Cigna Healthcare. While a solid specialty pharmacy services suite drives the growth of the Evernorth platform, the Cigna Healthcare unit benefits from an expansive customer base within its U.S. Government and U.S. Commercial businesses.
Undoubtedly, a rising customer base gives rise to growing premiums, which remains the most significant revenue component for any health insurer like Cigna. As of Dec 31, 2022, total medical customers of CI grew 5.4% year over year. An aging U.S. population is expected to sustain the solid demand for its Medicare plans, which falls under the Government business, in the days ahead.
In addition to the solid inflow of premiums, the Cigna Healthcare unit benefits on the back of continuous product expansions and new collaborations or contract extensions with renowned healthcare systems.
CI resorts to acquisitions in order to bolster its suite of solutions and capabilities as well as step into newer geographies and solidify its presence in existing markets. It has divested its non-health units in order to intensify its focus on its two growth platforms exhibiting solid potential. Divestitures were also a way for Cigna to bring down the mounting debt burden and its efforts have bore fruits as long-term debt witnessed a 9.7% year-over-year downfall as of Dec 31, 2022.
A growing cash balance and robust cash-generating abilities will continue to empower Cigna in undertaking business growth investments and prudently deploying capital via share repurchases and dividend payments. In Feb 2023, management approved a 10% hike in the quarterly dividend. Its dividend yield of 1.9% is higher than the industry’s average of 1.2%.
Stocks to Consider
Some better-ranked stocks in the Medical space are Masimo Corporation MASI, OraSure Technologies, Inc. OSUR and Elevance Health, Inc. ELV. While Masimo and OraSure Technologies sport a Zacks Rank #1 (Strong Buy), Elevance Health carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Masimo’s earnings surpassed estimates in each of the last four quarters, the average being 9.02%. The Zacks Consensus Estimate for MASI’s 2023 earnings indicates a 3.5% rise, while the same for revenues suggests an improvement of 19.5% from the respective prior-year tallies. The consensus mark for MASI’s 2023 earnings has moved 8.7% north in the past 30 days.
The bottom line of OraSure Technologies outpaced estimates in three of the trailing four quarters and missed the mark once, the average being 554.17%. The Zacks Consensus Estimate for OSUR’s 2023 earnings is pegged at 39 cents per share. A loss of 25 cents per share was reported in the prior year. OSUR has witnessed three upward estimate revisions for 2023 earnings compared to no downward revision over the past 60 days.
Elevance Health’s earnings outpaced estimates in each of the trailing four quarters, the average being 4.11%. The Zacks Consensus Estimate for ELV’s 2023 earnings indicates a 12.6% rise, while the same for revenues suggests an improvement of 5.9% from the respective prior-year tallies. The consensus mark for ELV’s 2023 earnings has moved up 0.1% in the past 30 days.
The Masimo stock has gained 11.1% in a year. However, shares of OraSure Technologies and Elevance Health have lost 18.7% and 8.7%, respectively, in the same time frame.
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