On Friday, Bernstein SocGen Group maintained an Outperform rating on Cigna Corporation (NYSE:CI) stock with a steady price target of $411.00. The firm highlighted Cigna's unique position in the specialty drug market, which is valued at approximately $400 billion and growing at a high single-digit rate.
Cigna's presence in both pharmacy benefits, which accounts for roughly 60% of the market, and medical benefits, served primarily by CuraScript and Carepath, allows the company to target the entire market.
Cigna anticipates long-term average annual earnings growth of 8-12% for its Specialty and Care Services, with Specialty expected to grow 8-11%. This growth is projected to come from a combination of secular industry growth (7-9%) and market share gains (around 2%). The company has identified the adoption of biosimilars and drug innovation in rare diseases as key growth drivers.
Biosimilars alone could represent a $100 billion opportunity by the end of the decade, while the market for gene cell therapies is expanding, with approximately 20 currently available and more in development.
Accredo, Cigna's specialty pharmacy, is distinguished by four key factors: specialized clinical support resources, a scaled operating model, comprehensive drug access, and the ability to compete across the entire market. These differentiators are seen as significant advantages over the competition.
Regarding policy impacts on the Specialty Pharmacy industry, the firm noted that most regulatory focus is on the legacy PBM business. However, Cigna has reportedly been successful in educating regulators on the differences between its business model and traditional PBMs, demonstrating the value and critical nature of their services to patients.
In other recent news, Express Scripts, a subsidiary of The Cigna Group, has challenged the Federal Trade Commission's actions regarding insulin pricing, arguing that they could potentially lead to higher drug prices.
The Cigna Group reported a significant increase in its second-quarter earnings for 2024, with total revenue of $60.5 billion, marking a 25% growth year-over-year, and adjusted earnings per share of $6.72, a 10% increase.
Financial services company Jefferies maintained a bullish stance on Cigna, raising its price target on the company's shares. These recent developments reflect Cigna's commitment to delivering value-driven solutions and its confidence in achieving its growth targets.
The Federal Trade Commission has initiated legal action against major pharmacy benefit managers, including Express Scripts, accusing them of manipulating the insulin market. Express Scripts has responded by filing a lawsuit against the FTC, challenging the accuracy of a recent report on the pharmacy benefit management industry.
Express Scripts has also taken legal action against the FTC, seeking the retraction of a July 2024 report, which the company claims contains false and misleading information about the pharmacy benefit management industry and its role in drug pricing. Express Scripts contends that its practices are instrumental in reducing drug costs for plan sponsors and their members.
Jefferies has raised its price target on shares of Cigna Corporation, maintaining a Buy rating on the healthcare insurance provider. This adjustment follows discussions with Cigna's CFO and Investor Relations lead, which highlighted several key factors driving the firm's positive outlook.
Finally, in the second quarter of 2024, Cigna Group announced a substantial increase in revenue and adjusted earnings per share, signaling strong growth and sustained momentum across its various business segments. The company reaffirmed its commitment to negotiating affordable pharmaceutical prices and expressed confidence in achieving its growth targets for 2024 and beyond.
InvestingPro Insights
As Cigna Corporation (NYSE:CI) garners attention for its strategic positioning in the specialty drug market, real-time metrics from InvestingPro paint a broad picture of the company's financial health and market performance. With a robust market capitalization of $96.44 billion, Cigna's valuation implies strong free cash flow yield, as indicated by its P/E Ratio (Adjusted) for the last twelve months as of Q2 2024 at 18.05. This is complemented by a notable revenue growth of 16.11% during the same period, showcasing the company's ability to expand in a competitive market.
InvestingPro Tips highlight that Cigna has been enhancing shareholder value through aggressive share buybacks and a high shareholder yield. In addition, the company has a track record of raising its dividend for 3 consecutive years, with the last dividend growth recorded at 13.82%. This consistent performance aligns with the firm's positive outlook on Cigna's growth in specialty pharmacy and care services.
For investors seeking more in-depth analysis, there are additional InvestingPro Tips available that delve into Cigna's financials and market trends. These include insights on the company's low revenue valuation multiple and its status as a prominent player in the Healthcare Providers & Services industry. To explore these further, interested readers can visit https://www.investing.com/pro/CI for a comprehensive investment perspective.
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