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Cigna (CI) Trending Up in 2017: What's Driving the Stock?
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Shares of Cigna Corp. (CI - Free Report) have registered a rise of 12% year to date, significantly outperforming the 0.3% uptick for the Zacks categorized Health Maintenance Organization industry.
This significant rise in share price looks all the more impressive against the backdrop of its failed merger with Anthem Inc. , which was blocked by regulators on antitrust concerns last month. The company’s share price reflects investors’ confidence in the company’s ability to continue with its stand-alone growth story.
Cigna helped investors to stay calm by disclosing its 2017 growth outlook just after the termination of the merger. The company projected that adjusted income from operations will grow in the range of 12–18% aided by its significant capital available for deployment. Moreover, the company announced that its board of directors has expanded its share repurchase authority to an aggregate of $3.7 billion. The amount of buyback will, however, be capped at $250 million per quarter until there is more clarity with respect to the litigation with Anthem.
The company is keen on expanding its Medicaid business. It will not come as a surprise to us if the company considers acquiring Medicaid-centric names like WellCare Health Plans, Inc. or Molina Healthcare Inc. (MOH - Free Report) .
On the organic front, the company is expected to strengthen its business position in Global Supplemental Benefits. The segment grew at a CAGR of 17% for revenues and 24% for earnings over the last six years (2011–2016). For 2017, the company expects adjusted income from operations in the range of $295–$315 million, which translates into year-over-year growth rate of nearly 4% (calculated at the mid-point).
The company’s membership has been growing. It is expected to add 300,000 to 500,000 total medical customers in the Global Health Care segment in 2017.
Image: Bigstock
Cigna (CI) Trending Up in 2017: What's Driving the Stock?
Shares of Cigna Corp. (CI - Free Report) have registered a rise of 12% year to date, significantly outperforming the 0.3% uptick for the Zacks categorized Health Maintenance Organization industry.
This significant rise in share price looks all the more impressive against the backdrop of its failed merger with Anthem Inc. , which was blocked by regulators on antitrust concerns last month. The company’s share price reflects investors’ confidence in the company’s ability to continue with its stand-alone growth story.
Cigna helped investors to stay calm by disclosing its 2017 growth outlook just after the termination of the merger. The company projected that adjusted income from operations will grow in the range of 12–18% aided by its significant capital available for deployment. Moreover, the company announced that its board of directors has expanded its share repurchase authority to an aggregate of $3.7 billion. The amount of buyback will, however, be capped at $250 million per quarter until there is more clarity with respect to the litigation with Anthem.
The company is keen on expanding its Medicaid business. It will not come as a surprise to us if the company considers acquiring Medicaid-centric names like WellCare Health Plans, Inc. or Molina Healthcare Inc. (MOH - Free Report) .
On the organic front, the company is expected to strengthen its business position in Global Supplemental Benefits. The segment grew at a CAGR of 17% for revenues and 24% for earnings over the last six years (2011–2016). For 2017, the company expects adjusted income from operations in the range of $295–$315 million, which translates into year-over-year growth rate of nearly 4% (calculated at the mid-point).
The company’s membership has been growing. It is expected to add 300,000 to 500,000 total medical customers in the Global Health Care segment in 2017.
Cigna carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.