On Tuesday, Piper Sandler initiated coverage on shares of CIGNA Corporation (NYSE:CI), assigning an Overweight rating and setting a price target of $400. The firm highlighted CIGNA's position as a diversified managed care and healthcare delivery organization with a strong presence in commercial insurance markets and pharmacy services.
The firm's analysis pointed out CIGNA's defensible leadership in the rapidly expanding specialty pharmacy market. This, combined with the company's insurance segment and core Pharmacy Benefit Management (PBM) business, is expected to drive long-term adjusted earnings per share (EPS) growth at a compound annual growth rate (CAGR) of 10-14%.
Despite CIGNA's potential for premium EPS growth, Piper Sandler noted that the stock is currently trading at a discount compared to its competitors. The firm's valuation of CIGNA is based on a 12.5 times multiple of the company's projected calendar year 2025 adjusted EPS of $31.99.
The Overweight rating suggests that Piper Sandler believes CIGNA's stock will outperform the average return of the stocks that the firm covers over the next 12 to 18 months. The price target of $400 implies a significant upside from the current trading levels of CIGNA's shares.
CIGNA's diversified business model and its strategic position in the specialty pharmacy market are key factors that underpin Piper Sandler's positive outlook on the company's stock. The firm's initiation of coverage with a favorable rating indicates confidence in CIGNA's earnings growth trajectory and its valuation in the market.
In other recent news, Cigna Corporation (NYSE:CI) has received multiple price target upgrades following robust first-quarter results. Jefferies raised its target from $385 to $407, citing Cigna's outperformance in its medical loss ratio.
Despite weaker margins in Evernorth, Jefferies anticipates more substantial upside in Cigna's healthcare segment. In response to the strong quarterly results, Oppenheimer also increased its price target from $370 to $400 while maintaining an Outperform rating. The firm also raised its EPS estimates for 2024, 2025, and 2026.
Cantor Fitzgerald increased its price target to $400 from $384, reflecting confidence in Evernorth's earnings growth. The firm also cited potential risks that could impact the new price target, including larger-than-expected employer give-backs and higher initial costs related to the launch of the CNC contract. RBC Capital Markets slightly adjusted its price target to $384 from $383, highlighting Cigna's cost management and proactive pricing strategies.
Cigna's Q1 2024 revenue reached $57.3 billion with an adjusted EPS of $6.47, prompting the company to raise its full-year adjusted EPS guidance to at least $28.40. Growth was driven by increases in their Specialty businesses within Evernorth and the Cigna Healthcare segment.
These are the latest developments for Cigna Corporation, reflecting the company's strong performance and positive market outlook.
InvestingPro Insights
As Piper Sandler initiates coverage on CIGNA Corporation with an optimistic outlook, real-time data from InvestingPro further enriches the investment narrative. CIGNA's management has demonstrated confidence in the company's prospects through aggressive share buybacks, an action that often signals belief in the company's undervalued stock (InvestingPro Tip).
The company's commitment to shareholder returns is evident as it has raised its dividend for three consecutive years, with a notable 13.82% dividend growth in the last twelve months as of Q1 2024 (InvestingPro Tip).
InvestingPro Data underscores the financial health and market position of CIGNA, with a robust market capitalization of $96.25 billion USD and a revenue growth of 11.67% in the last twelve months as of Q1 2024. Moreover, the stock is trading near its 52-week high, at 92.64% of this peak value, reflecting investor confidence and market momentum. With a P/E ratio adjusted to 18.44 for the last twelve months as of Q1 2024, CIGNA's valuation appears attractive, especially when considering the strong free cash flow yield implied by this metric.
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