Market News

Cigna’s Earnings Beat Expectations, 2021 Outlook Raised

Cigna (CI) reported strong first-quarter results despite facing pandemic challenges that increased its costs. It also raised its 2021 revenue and profit forecast. 

The company operates in the healthcare sector, providing various health insurance solutions. It posted adjusted EPS of $4.73 on adjusted revenue of $41 billion. That compared to adjusted EPS of $4.69 and revenue of $38.4 billion in the same period last year. The EPS figure beat Wall Street’s estimate of $4.37.

The results would have been better if not for the extra costs the company incurred in relation to the COVID-19 pandemic. The impact was particularly felt in COVID-19 testing, treatment, and vaccine expenses. The pandemic also caused revenue loss from specialty products and some disenrollment as clients faced tough economic times. 

“Cigna remains dedicated to supporting our customers, clients, and communities through the disruption of the COVID-19 pandemic, while also delivering strong financial results,” said President and CEO David Cordani.

The company returned $2.8 billion to shareholders in Q1 through its stock repurchase program. It has spent $3.2 billion on the program this year and bought back a total of 14.4 million shares. (See Cigna stock analysis on TipRanks)

On the back of strong Q1 results, Cigna boosted its 2021 profit and revenue forecast. It has raised its adjusted EPS target to at least $20.20 from $20 previously. It lifted the adjusted revenue outlook to $166 billion from $165 billion previously. 

Oppenheimer analyst Michael Wiederhorn assigned a Buy rating with a price target of $254 on Cigna stock. Wiederhorn’s price target implies 2.75% downside potential from the current price.

“We believe the market is undervaluing the opportunity from the highly accretive Express Scripts deal, which should pay  strong  long-term  returns  for  shareholders given  the  diversification,  opportunity  to  cross-sell  its  services, and a more equity-friendly capital structure,” wrote Wiederhorn.

Consensus among analysts on Wall Street is a Strong Buy based on 10 Buy and 2 Hold ratings. The average analyst price target of $274.45 implies 5.08% upside potential.

Cigna scores a “Perfect 10” on TipRanks’ Smart Score rating system, indicating that the stock is likely to outperform the market.

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