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Cigna (CI) Poised to Beat on Earnings in Q3: Here's Why
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Health insurer Cigna Corp. (CI - Free Report) is expected to release third-quarter financial results before the market opens on Nov 3.
In the last reported quarter, the company missed the earnings estimate by 17.15%. Let’s see how things are shaping up for this announcement.
Why a Likely Positive Surprise?
Our proven model shows that Cigna is likely to beat on earnings as it has the right combination of the two key components. Note that a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or #2 (Buy) or at least #3 (Hold) to have a significantly higher chance of beating estimates.
Zacks ESP: The Earnings ESP for Cigna is +2.62%. This is because the Most Accurate estimate of $1.96 per share is above the Zacks Consensus Estimate of $1.91 per share. Please check our Earnings ESP Filter that enables you find stocks that are expected to come out with earnings surprises.
Zacks Rank: Cigna’s Zacks Rank #3 increases the predictive power of ESP.
Factors to Drive Q3 Results
The poor performance in Disability is a result of modifications made to the disability claim process, in the first quarter this year, where the company is investing additional resources in the upfront medical review of claims to conduct further physical examinations, perform deeper medical history reviews and enhanced documentation.
These modifications resulted in longer claim cycles, thereby increasing the disability durations and claim inventory which contributed significantly to the unfavorable financial impact experienced in the first-half of 2016 for this business.
Cigna’s U.S. individual business is likely to have experienced softness similar to the rest of the industry.
The third-quarter results are expected to demonstrate continued strength in the operating performance of the Global Health Care and Global Supplemental benefits’ business.
We expect the company to continue posting favorable results on solid revenue growth in the government business, disciplined expense management and effective medical cost management.
Favorable medical utilization along with medical cost management is expected to contribute to the bottom line.
Moreover, its strong balance sheet which enables share buyback should support the upcoming results.
Here are three stocks from the medical sector which you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Aerie Pharmaceuticals, Inc. has an Earnings ESP of +8.57% and a Zacks Rank #3. The company is scheduled to release third-quarter results on Nov 2.
AMN Healthcare Services Inc. (AMN - Free Report) has an Earnings ESP of +1.79% and a Zacks Rank #3. The company is scheduled to release third-quarter results on Nov 3.
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Cigna (CI) Poised to Beat on Earnings in Q3: Here's Why
Health insurer Cigna Corp. (CI - Free Report) is expected to release third-quarter financial results before the market opens on Nov 3.
In the last reported quarter, the company missed the earnings estimate by 17.15%. Let’s see how things are shaping up for this announcement.
Why a Likely Positive Surprise?
Our proven model shows that Cigna is likely to beat on earnings as it has the right combination of the two key components. Note that a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or #2 (Buy) or at least #3 (Hold) to have a significantly higher chance of beating estimates.
Zacks ESP: The Earnings ESP for Cigna is +2.62%. This is because the Most Accurate estimate of $1.96 per share is above the Zacks Consensus Estimate of $1.91 per share. Please check our Earnings ESP Filter that enables you find stocks that are expected to come out with earnings surprises.
Zacks Rank: Cigna’s Zacks Rank #3 increases the predictive power of ESP.
Factors to Drive Q3 Results
The poor performance in Disability is a result of modifications made to the disability claim process, in the first quarter this year, where the company is investing additional resources in the upfront medical review of claims to conduct further physical examinations, perform deeper medical history reviews and enhanced documentation.
These modifications resulted in longer claim cycles, thereby increasing the disability durations and claim inventory which contributed significantly to the unfavorable financial impact experienced in the first-half of 2016 for this business.
Cigna’s U.S. individual business is likely to have experienced softness similar to the rest of the industry.
The third-quarter results are expected to demonstrate continued strength in the operating performance of the Global Health Care and Global Supplemental benefits’ business.
We expect the company to continue posting favorable results on solid revenue growth in the government business, disciplined expense management and effective medical cost management.
Favorable medical utilization along with medical cost management is expected to contribute to the bottom line.
Moreover, its strong balance sheet which enables share buyback should support the upcoming results.
CIGNA CORP Price and EPS Surprise
CIGNA CORP Price and EPS Surprise | CIGNA CORP Quote
Other Stocks to Consider
Here are three stocks from the medical sector which you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Humana Inc. (HUM - Free Report) is expected to report third-quarter earnings results on Nov 4. The company has an Earnings ESP of +2.94% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Aerie Pharmaceuticals, Inc. has an Earnings ESP of +8.57% and a Zacks Rank #3. The company is scheduled to release third-quarter results on Nov 2.
AMN Healthcare Services Inc. (AMN - Free Report) has an Earnings ESP of +1.79% and a Zacks Rank #3. The company is scheduled to release third-quarter results on Nov 3.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>