The managed healthcare and insurance company Cigna Group (NYSE:CI) agreed to pay $172 million to settle allegations violating the False Claims Act. This settlement fully resolves the charges against the company that it submitted erroneous and deceptive patient diagnosis data to CMS (Centers for Medicare and Medicaid Services) intending to inflate payments from Medicare.
As part of the settlement, Cigna entered into a five-year Corporate Integrity Agreement with HHS-OIG (U.S. Department of Health and Human Services Office of Inspector General). This mandates Cigna to enforce a range of accountability and auditing measures.
Moreover, Cigna’s senior executives and board members must certify each year that the firm is adhering to compliance requirements. Furthermore, Cigna will carry out annual risk evaluations and other forms of oversight. In addition to these, an independent review organization will perform audits centered on risk adjustment data.
While the company resolves this long-running legal matter, let’s consider what the Street recommends for Cigna stock.
Is Cigna a Buy, Hold, or Sell?
Wall Street analysts are cautiously optimistic about Cigna stock. The company’s top-line benefits from a solid client retention rate and the strength of the Evernorth Health Services and Cigna Healthcare segments. However, its bottom-line numbers remain under pressure due to its investments in technology to support new business growth.
Given the near-term pressure on earnings, Cigna stock has a Moderate Buy consensus rating, reflecting seven Buy and three Hold recommendations. Cigna stock has lagged the broader markets this year and is down about 12.5% year-to-date. However, on a more positive note, analysts’ average 12-month price target of $344.78 implies 20.52% upside potential in CI stock from current levels.