Cigna Snaps Up MDLive To Meet COVID-19 Care Needs; Street Sees 23% Upside

Cigna Corp.’s health services division Evernorth has agreed to acquire 24/7 virtual care platform MDLive for an undisclosed sum.

Cigna (CI) said that this acquisition provides Evernorth with a complementary portfolio to offer more affordable, convenient, and connected telehealth experience to patients. MDLive has expertise in medical as well as behavioural health.

With this transaction Evernorth seeks to improve early identification and diagnosis of critical care needs, efficient referrals to providers and convenient access to service sites.

The acquisition, which is subject to customary closing conditions, is expected to close in 2Q. Further details on the transaction will be presented at Cigna’s investor day on March 8.

Cigna projected adjusted earnings per share of at least $20 for fiscal 2021, including the impact of the acquisition. (See Cigna stock analysis on TipRanks)

Evernorth CEO Tim Wentworth commented, “Customers expect more convenient care interactions, and COVID-19 has rapidly accelerated this need. We see an immediate opportunity to build a new model of care delivery, one that that delivers a connected experience with greater affordability, predictability and simplicity.”

On Feb. 5, Citigroup analyst Ralph Giacobbe reiterated a Buy rating and a price target of $273 (30% upside potential) on the stock. Commenting on Cigna’s 4Q performance Giacobbe said, “The 6% post-earnings pullback in the stock is excessive for what will likely prove transient headwinds related to COVID impact in 2021.”

Giacobbe sees upside to 2022 estimates and continues to view the stock as undervalued.

Turning to the rest of Wall Street, Cigna has a Strong Buy consensus rating based on 12 Buys and 1 Hold. The average analyst price target of $258.31 implies about 23% upside from current levels. Cigna stock has seen a price increase of about 15% over the past year.

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