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Why Is Cigna (CI) Up 4.9% Since the Last Earnings Report?
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It has been about a month since the last earnings report for Cigna Corporation (CI - Free Report) . Shares have added about 4.9% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Cigna Beats on Q1 Earnings and Revenues, Guides Up
Cigna reported first-quarter 2017 operating net earnings of $2.77 per share, comfortably beating the Zacks Consensus Estimate of $2.44 and increasing 19% year over year. Earnings beat reflected strong contribution from each of the company’s business segments.
Net revenue of $10.34 billion outpaced the Zacks Consensus Estimate of $9.94 billion. Further, revenues were up 5% year over year.
Premiums of $8.1 billion increased 4.6% year over year, while mail order pharmacy revenues grew 1.9%.
The company had total 15.7 million medical customers as of Mar 31, 2017.
Global Health Care: Premiums and fees from the segment increased 4% year over year to $7.34 billion. The improvement was driven by customer growth and specialty contributions in the company’s Commercial employer group. However, the upside was partially offset by reductions in Government customers.
Adjusted operating earnings were $610 million, up 12% year over year on favorable prior-year reserve development.
Global Supplemental Benefits: Premiums and fees from this segment climbed 12.6% year over year to $869 million on the back of continued business growth.
Adjusted operating income increased 10.4% year over year to $74 million, reflecting business growth and strong operating expense management.
Global Disability and Life: Premiums and fees also increased 0.4% year over year to $1.03 billion, primarily driven by consistent business growth across disability and life products.
Adjusted operating income increased to $68 million from $15 million in the year-ago quarter, reflecting continued stable life results as well as further improvement in disability performance.
Corporate and Other Operations: This segment reported adjusted loss from operations of $33 million, wider than a loss of $25 million in the prior-year quarter.
Financial Position
Cash and marketable investments were $2.7 billion at Mar 31, 2017 and $2.8 billion at year-end 2016.
Year to date, the company has repurchased 2.3 million shares of common stock for approximately $340 million.
2017 Guidance
Cigna pulled up its 2017 earnings guidance after strong first-quarter results. It expects adjusted income from operations the range of $2.41 billion to $2.53 billion, or $9.25 to $9.75 per share, up from the previous estimate of $9.00–$9.50.
It expects revenues to grow 3% to 4% from the previous growth range of 2% to 3%. The company expects global medical customer growth in the range of 0.5 million to 0.6 million, up from the earlier range of 0.3 million to 0.5 million.
Cigna also anticipates adjusted income from operations for Global Health Care in the band of $2.065–$2.135 billion ($2.03–$2.11 billion). Global Supplemental Benefits remains unchanged at $295–$315 million and Group Disability and Life is expected at $230–260 million (previously $200–$230 million). For the Corporate and Other segment, the company retained its earlier expectation of an adjusted loss from operations of $180 million.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been three revisions higher for the current quarter compared to one lower.
At this time, Cigna's stock has a nice Growth Score of 'B', though it is lagging a bit on the momentum front with a 'C'. The stock was allocated a grade of 'B' on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is suitable for value and growth investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. It comes with little surprise the stock has a Zacks Rank #2 (Buy). We are expecting an above average return from the stock in the next few months.
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Why Is Cigna (CI) Up 4.9% Since the Last Earnings Report?
It has been about a month since the last earnings report for Cigna Corporation (CI - Free Report) . Shares have added about 4.9% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Cigna Beats on Q1 Earnings and Revenues, Guides Up
Cigna reported first-quarter 2017 operating net earnings of $2.77 per share, comfortably beating the Zacks Consensus Estimate of $2.44 and increasing 19% year over year. Earnings beat reflected strong contribution from each of the company’s business segments.
Net revenue of $10.34 billion outpaced the Zacks Consensus Estimate of $9.94 billion. Further, revenues were up 5% year over year.
Premiums of $8.1 billion increased 4.6% year over year, while mail order pharmacy revenues grew 1.9%.
The company had total 15.7 million medical customers as of Mar 31, 2017.
Global Health Care: Premiums and fees from the segment increased 4% year over year to $7.34 billion. The improvement was driven by customer growth and specialty contributions in the company’s Commercial employer group. However, the upside was partially offset by reductions in Government customers.
Adjusted operating earnings were $610 million, up 12% year over year on favorable prior-year reserve development.
Global Supplemental Benefits: Premiums and fees from this segment climbed 12.6% year over year to $869 million on the back of continued business growth.
Adjusted operating income increased 10.4% year over year to $74 million, reflecting business growth and strong operating expense management.
Global Disability and Life: Premiums and fees also increased 0.4% year over year to $1.03 billion, primarily driven by consistent business growth across disability and life products.
Adjusted operating income increased to $68 million from $15 million in the year-ago quarter, reflecting continued stable life results as well as further improvement in disability performance.
Corporate and Other Operations: This segment reported adjusted loss from operations of $33 million, wider than a loss of $25 million in the prior-year quarter.
Financial Position
Cash and marketable investments were $2.7 billion at Mar 31, 2017 and $2.8 billion at year-end 2016.
Year to date, the company has repurchased 2.3 million shares of common stock for approximately $340 million.
2017 Guidance
Cigna pulled up its 2017 earnings guidance after strong first-quarter results. It expects adjusted income from operations the range of $2.41 billion to $2.53 billion, or $9.25 to $9.75 per share, up from the previous estimate of $9.00–$9.50.
It expects revenues to grow 3% to 4% from the previous growth range of 2% to 3%. The company expects global medical customer growth in the range of 0.5 million to 0.6 million, up from the earlier range of 0.3 million to 0.5 million.
Cigna also anticipates adjusted income from operations for Global Health Care in the band of $2.065–$2.135 billion ($2.03–$2.11 billion). Global Supplemental Benefits remains unchanged at $295–$315 million and Group Disability and Life is expected at $230–260 million (previously $200–$230 million). For the Corporate and Other segment, the company retained its earlier expectation of an adjusted loss from operations of $180 million.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been three revisions higher for the current quarter compared to one lower.
Cigna Corporation Price and Consensus
Cigna Corporation Price and Consensus | Cigna Corporation Quote
VGM Scores
At this time, Cigna's stock has a nice Growth Score of 'B', though it is lagging a bit on the momentum front with a 'C'. The stock was allocated a grade of 'B' on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is suitable for value and growth investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. It comes with little surprise the stock has a Zacks Rank #2 (Buy). We are expecting an above average return from the stock in the next few months.