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Here's Why You Should Hold Cigna (CI) Stock in Your Portfolio

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Cigna Corporation (CI - Free Report) continues to benefit from continually growing revenues resulting from solid segmental contributions and a well-performing U.S. Commercial business. A sound financial position also acts as an additional tailwind for the stock.

Zacks Rank & Price Performance

Cigna carries a Zacks Rank #3 (Hold) at present.

The stock has gained 36.4% in a year compared with the industry’s 12.7% growth. The Medical sector and the S&P Index have declined 12.5% and 19.7%, respectively, in the same time frame.

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Favorable Style Score

CI is well-poised for progress, as evident from its impressive VGM Score of A. Here V stands for Value, G for Growth and M for Momentum, and the score is a weighted combination of all three factors.

Robust 2023 Prospects

The Zacks Consensus Estimate for CI’s 2023 earnings is pegged at $24.81 per share, indicating an improvement of 7.2% from a year earlier estimate, while the same for revenues stands at $189.4 billion, implying a 5.2% increase from the prior-year estimate.

Impressive Surprise History

CI’s earnings outpaced estimates in each of the trailing four quarters, the average being 9.84%.

Business Tailwinds

Solid performances of the Evernorth and Cigna Healthcare segments continue to drive Cigna’s performance. CI intends to achieve 10-13% average annual adjusted earnings per share growth on a long-term basis.

Solid specialty pharmacy services continue to drive the growth of the Evernorth platform. Thereby, Cigna’s December 2022 announcement to include biosimilars as preferred products within its commercial formularies from 2023 seems a prudent move in order to upgrade the pharmacy products suite.

Meanwhile, the Cigna Healthcare segment is aided by growing premiums resulting from an extensive customer base within its U.S. Commercial and U.S. Government businesses. An aging U.S. population is expected to sustain solid demand for Cigna’s Medicare plans, which fall under its U.S. Government business. In addition to a solid premium base, the Cigna Healthcare unit benefits on the back of continuous product expansions and new collaborations or contract extensions with renowned healthcare systems. As of Sep 30, 2022, total medical customers of CI rose 5.6% year over year.

Such promising prospects of the two growth platforms propelled Cigna to divest non-health units and intensify focus on the core units. The proceeds received from the sell-offs were tactically utilized by CI to bring down the mounting debt burden and continually engage in share repurchases.

Cigna also boasts a solid financial standing, substantiated by growing cash reserves and robust cash-generating abilities. The financial strength can be leveraged by the health insurer to undertake uninterrupted business investments.

Stocks to Consider

Some better-ranked stocks in the Medical space are STAAR Surgical Company (STAA - Free Report) , Boston Scientific Corporation (BSX - Free Report) and Intuitive Surgical, Inc. (ISRG - Free Report) . While STAAR Surgical sports a Zacks Rank #1 (Strong Buy), Boston Scientific and Intuitive Surgical carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

STAAR Surgical’s earnings surpassed estimates in each of the last four quarters, the average being 61.05%. The Zacks Consensus Estimate for STAA’s 2023 earnings indicates a 19% rise, while the same for revenues suggests an improvement of 24.5% from the respective prior-year estimates. The consensus mark for STAA’s 2023 earnings has moved 7.3% north in the past 60 days.

The bottom line of Boston Scientific outpaced estimates in three of the trailing four quarters and missed the mark once, the average being 1.85%. The Zacks Consensus Estimate for BSX’s 2023 earnings indicates a 10.9% rise, while the same for revenues suggests an improvement of 5.9% from the respective prior-year estimates. BSX has witnessed one upward estimate revision for 2023 earnings compared to no downward revision over the past 60 days.  

Intuitive Surgical’s earnings outpaced estimates in three of the trailing four quarters and missed the mark once, the average being 3.41%. The Zacks Consensus Estimate for ISRG’s 2023 earnings indicates a 13.7% rise, while the same for revenues suggests an improvement of 11.7% from the respective prior-year estimates. The consensus mark for ISRG’s 2023 earnings has moved up 0.4% in the past 60 days.

The Boston Scientific stock has gained 9.1% in a year. However, shares of STAAR Surgical and Intuitive Surgical have lost 34.6% and 19.2%, respectively, in the same time frame.

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