A new analyst perspective can often benefit stock prices, and today, prescription benefit manager Cigna (NYSE:CI) was no exception. Bernstein’s upgrade, via analyst Lance Wilkes, was enough to give Cigna a solid boost in Thursday afternoon’s trading session.
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Bernstein now looks for Cigna to enjoy improvements in its earnings growth for its prescription benefit line and its employer business line. That, coupled with cash flow that Bernstein calls “solid,” should pave the way for a major stock buyback in 2024, with a projected price tag of $10 billion. Further, Bernstein analysts are looking for Cigna to get a little help from Washington, thanks to “mild PBM legislation” that should serve as a “…potential clearing event which could trigger multiple expansion.”
But Then There’s the Medicare Business
This is welcome news for Cigna investors—especially based on the surge in share price seen today—but it isn’t all good news. Cigna actually slipped in yesterday’s trading after word emerged that it was looking to sell off its Medicare business for between $3 billion and $4 billion. It also set up a new two-year deal with WakeMed Health & Hospitals that would see all WakeMed providers added as in-network options to all Cigna plans and the Marketplace Exchange. It’s safe to say that Cigna could certainly use a few billion dollars in its coffers—who couldn’t, these days—but it might be giving up a slice of a very secure business, as Medicare’s chance of failure is remarkably slim.
Is Cigna a Good Stock to Buy Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on CI stock based on seven Buys and seven Holds assigned in the past three months, as indicated by the graphic below. After a 2.72% rally in its share price over the past year, the average CI price target of $365.33 per share implies 19.07% upside potential.
