On Tuesday, Jefferies, a financial services company, raised its price target on shares of Cigna Corporation (NYSE:CI) to $422 from $402, while maintaining a Buy rating on the healthcare insurance provider. The adjustment follows discussions with Cigna's CFO Brian Evanko and Investor Relations lead Ralph Giacobbe, which highlighted several key factors driving the firm's positive outlook.
The company's executives emphasized the significant impact of a wave of specialty drugs that are expected to lose exclusivity by the year 2030, which could benefit Cigna's Specialty business. Additionally, they noted Cigna's ability to adapt its Express Scripts (ESI) revenue streams in response to regulatory changes.
The discussions also covered the balancing act of pricing and trends within Cigna Healthcare (CH), suggesting a move towards equilibrium. Another point of focus was the company's capital flexibility, which is tempered by a disciplined approach to share repurchases.
Jefferies revised its earnings per share (EPS) estimate for 2025 to exclude the minority contribution from VillageMD, a network of physician practices. The firm's stance on Cigna remains bullish, with the updated price target reflecting confidence in the company's growth prospects and strategic initiatives.
In other recent news, Cigna Group has reported a significant increase in its second-quarter earnings for 2024. The company announced total revenue of $60.5 billion, a 25% growth compared to the previous year, and adjusted earnings per share of $6.72, marking a 10% increase year-over-year. This robust growth was evident across various business segments, including Evernorth Health Services and Care Services, with Evernorth's adjusted income rising by 12%.
Furthermore, Express Scripts, Cigna's foundational pharmacy benefit services business, showed strong client demand and innovation. Cigna Healthcare also continued to deliver value-driven solutions and is planning to divest its Medicare Advantage business by the first quarter of 2025. The company remains committed to negotiating affordable pharmaceutical prices and is confident in achieving its growth targets for 2024 and beyond.
Cigna Group's full-year guidance for adjusted EPS is at least $28.40 for 2024, with an anticipated average annual adjusted EPS growth of 10% to 14%. However, it's worth noting that the company expects a higher medical cost ratio in the second half of the year compared to the first half.
InvestingPro Insights
Following the positive outlook from Jefferies, current InvestingPro data and tips further illuminate the financial landscape of Cigna Corporation (NYSE:CI). The company boasts a robust market capitalization of $102.55 billion, underscoring its significant presence in the healthcare insurance sector. Notably, Cigna's commitment to rewarding shareholders is evident through its aggressive share buyback strategy and a high shareholder yield. In addition, the company has a track record of raising its dividend for 3 consecutive years, with a dividend yield of 1.54% as of the last twelve months ending Q2 2024.
InvestingPro Tips also highlight Cigna's status as a prominent player in the Healthcare Providers & Services industry, with a valuation that implies a strong free cash flow yield. This is supported by a P/E ratio adjusted for the last twelve months as of Q2 2024 at 19.2. Moreover, Cigna's stock is known for low price volatility, which may appeal to investors seeking stability in their portfolio. For those considering an investment in Cigna, the company's consistent dividend payments over the last 43 years and its profitability over the last twelve months should be compelling factors.
For more comprehensive analysis and additional InvestingPro Tips on Cigna Corporation, interested readers can explore https://www.investing.com/pro/CI, which offers a total of 14 tips, providing a deeper dive into the company's financial health and market position.
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