Cigna Corporation ( CI Quick Quote CI - Free Report) is well-poised for growth, courtesy of improved revenues, numerous acquisitions and tie-ups, growing medical membership and solid financial position. An optimistic 2021 outlook instills further confidence. Zacks Rank & Price Performance
Cigna carries a Zacks Rank #3 (Hold), at present.
The stock has gained 19.5% in a year compared with the
industry’s rally of 25.1%. The Medical sector declined 3.5%. The S&P Index climbed 30.5% in the same time frame. Image Source: Zacks Investment Research Growth Prospects
The Zacks Consensus Estimate for the company’s 2021 earnings reflect improvement of 10% from the prior-year’s reported figure. The consensus mark for 2021 revenues indicates growth of 5.8% from the year-ago reported figure.
Impressive Earnings Surprise History
Cigna outpaced earnings estimates in three of the trailing four quarters and missed once, the average surprise being 3.08%.
Upbeat Outlook for 2021
The healthcare provider boasts of a robust business outlook for this year. Revenues are anticipated at around $170 billion, which suggests growth of 6% from the 2020-end reported figure.
Adjusted income from operations per share is now estimated at a minimum of $20.20, which indicates improvement of 9.5% from the reported figure at 2020 end.
The company is well-poised for progress, as evident from its favorable
VGM Score of A. Here V stands for Value, G for Growth and M for Momentum, with the score being a weighted combination of all three factors.
It has an impressive
Value Score of A, which reflects an attractive valuation of the stock. Business Tailwinds
The company’s top line continues to be driven by three robust growth platforms — Evernorth, U.S. Medical and International Markets. Through these platforms, Cigna strives to launch cost-effective solutions and address whole-person needs. The company’s diversified healthcare portfolio aims to boost patient’s access to high-quality treatment and ensure uninterrupted healthcare services across several regions of the United States.
For more than a decade, the healthcare provider has maintained a track record of reporting average annual adjusted EPS growth higher than the long-term target of 10% to 13%. It aims to maintain a long-term target growth in the range of 6% to 8% with regard to average annual adjusted revenues.
Time and again, Cigna has pursued acquisitions or partnered with healthcare systems for bolstering its partner networks and strengthening U.S. presence. Cumulatively, these initiatives have provided a boost to the medical membership of the company. This year, the medical customer growth of the company is anticipated at a minimum of 350,000 customers. Notably, the metric declined by 472,000 last year due to the COVID-related disruptions.
Besides, the company divested its group life and disability insurance business to New York Life in a bid to deepen focus on Cigna’s healthcare business. The step was aimed at bringing down the company's high debt levels, which have been plaguing it. A lower debt level will benefit the bottom line of any company with reduced interest expenses. The same reduced 20% in the first half of 2021 for Cigna.
The healthcare provider has strong cash balance and solid cash generation abilities in place. These tailwinds have enabled it to undertake several growth-related efforts and tactically deploy capital through share buybacks and dividend payments. Cigna has been a regular dividend paying company. Its dividend yield of 2% lies higher than the industry’s figure of 1.2%. The company’s leverage ratio of 40.5% at the second-quarter end remained almost in line with the company’s long-term target debt-to-capitalization of around 40%.
Stocks to Consider
Some better-ranked stocks in the medical space include
UnitedHealth Group Incorporated ( UNH Quick Quote UNH - Free Report) , The Joint Corp. ( JYNT Quick Quote JYNT - Free Report) and Universal Health Services, Inc. ( UHS Quick Quote UHS - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see . the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
UnitedHealth Group, Joint Corp. and Universal Health have a trailing four-quarter earnings surprise of 12.49%, 235.00% and 29.01%, on average, respectively.