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Analyzing How You Should Play Cigna (CI) Ahead of Q1 Earnings
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The Cigna Group (CI - Free Report) is set to sustain its earnings beat streak for the first quarter of 2024, the results for which are scheduled to be released on May 2, before the opening bell. Growth in commercial memberships and strengthening performance in Cigna Healthcare and Evernorth businesses are expected to continue driving its results.
The combination of these factors, alongside other favorable conditions, is expected to have a positive impact on its stock performance, which has already been surpassing its peers in 2024. Year to date, Cigna shares have surged 19%, outpacing the industry's 4.8% decline and exceeding the S&P 500 Index's 7.6% rise.
Image Source: Zacks Investment Research
Another Beat in the Cards?
The Zacks Consensus Estimate for the company’s commercial middle market memberships suggests a 1.4% rise from the prior-year quarter’s reported figure, while our estimate indicates a 1.2% jump. The consensus mark for commercial select memberships predicts a 2.5% year-over-year growth. These will help the company to boost profits. As such, the consensus mark for pre-tax adjusted income from the Cigna Healthcare unit indicates nearly 20% growth.
Furthermore, its specialty strength and consistent affordability improvements are likely to have benefited the Evernorth business. The consensus mark for pre-tax adjusted income from the unit indicates a nearly 2% rise from a year ago.
The Zacks Consensus Estimate for first-quarter earnings per share of $6.17 suggests a 14.1% increase from the prior-year period. The consensus mark has remained stable over the past week. It beat estimates in all the trailing four quarters, delivering an average surprise of 2.9%.
Our proven model predicts a likely earnings beat for the company this time around as well. CI has an Earnings ESP of +0.48% as the Most Accurate Estimate of $6.20 per share is currently pegged higher than the Zacks Consensus Estimate of $6.17. Also, it currently has a Zacks Rank #3 (Hold). The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 increases the chances of an earnings beat, which is precisely the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Also, the consensus estimate for first-quarter revenues of $56.6 billion indicates a 21.9% year-over-year increase, supported by premium rate hikes and organic growth.
Considering Investment: A Decision Guide
Cigna's significant growth potential, supported by its expanding portfolio, increasing market share, shareholder value-boosting initiatives, strategic acquisitions and partnerships, position it as an attractive investment opportunity. Add another earnings beat to that mix and you have a company, which is potentially up for another bull run.
Also, the forward 12-month price-to-earnings ratio of 12.1X, notably below the industry average of 15.3X, suggests that the stock is attractively priced for investors. However, as more people are resuming elective procedures, which were earlier paused due to pandemic-related restrictions, medical costs are rising. This will keep its profit growth potential under check. Considering total benefits and expenses, our model suggests massive growth for the first quarter, exceeding the $50 billion mark.
The Zacks Consensus Estimate for the medical care ratio stands at 81.9% for the quarter, reflecting a slight increase from the year-ago level of 81.3%. This suggests that a lower proportion of premiums likely remained after clearing claims.
In conclusion, while Cigna shows promise of exceeding earnings estimates in the first quarter and possesses strong long-term growth prospects with an attractive valuation, its increasing medical costs and medical care ratio warrant close monitoring from investors for now.
Other Stocks That Warrant a Look
Here are some other companies worth considering from the broader Medical space, as our model shows that these, too, have the right combination of elements to beat on earnings this time around:
The Zacks Consensus Estimate for Affimed’s bottom line for the to-be-reported quarter indicates a 19.1% year-over-year improvement. The estimate remained stable over the past week. The consensus mark for AFMD’s revenues is pegged at nearly $1.8 million for the quarter.
IGM Biosciences, Inc. (IGMS - Free Report) has an Earnings ESP of +1.69% and a Zacks Rank #2.
The Zacks Consensus Estimate for IGM Biosciences’ bottom line for the to-be-reported quarter indicates a 36.8% year-over-year improvement. IGMS beat earnings estimates in three of the past four quarters and met once, with an average surprise of 6.1%.
Fresenius Medical Care AG (FMS - Free Report) has an Earnings ESP of +7.69% and is a Zacks #3 Ranked player.
The Zacks Consensus Estimate for Fresenius Medical’s earnings per share for the to-be-reported quarter is pegged at 26 cents per share, which increased by 2 cents in the past month. FMS beat earnings estimates in three of the past four quarters and missed once, the average surprise being 25.8%.
Image: Bigstock
Analyzing How You Should Play Cigna (CI) Ahead of Q1 Earnings
The Cigna Group (CI - Free Report) is set to sustain its earnings beat streak for the first quarter of 2024, the results for which are scheduled to be released on May 2, before the opening bell. Growth in commercial memberships and strengthening performance in Cigna Healthcare and Evernorth businesses are expected to continue driving its results.
The combination of these factors, alongside other favorable conditions, is expected to have a positive impact on its stock performance, which has already been surpassing its peers in 2024. Year to date, Cigna shares have surged 19%, outpacing the industry's 4.8% decline and exceeding the S&P 500 Index's 7.6% rise.
Image Source: Zacks Investment Research
Another Beat in the Cards?
The Zacks Consensus Estimate for the company’s commercial middle market memberships suggests a 1.4% rise from the prior-year quarter’s reported figure, while our estimate indicates a 1.2% jump. The consensus mark for commercial select memberships predicts a 2.5% year-over-year growth. These will help the company to boost profits. As such, the consensus mark for pre-tax adjusted income from the Cigna Healthcare unit indicates nearly 20% growth.
Furthermore, its specialty strength and consistent affordability improvements are likely to have benefited the Evernorth business. The consensus mark for pre-tax adjusted income from the unit indicates a nearly 2% rise from a year ago.
The Zacks Consensus Estimate for first-quarter earnings per share of $6.17 suggests a 14.1% increase from the prior-year period. The consensus mark has remained stable over the past week. It beat estimates in all the trailing four quarters, delivering an average surprise of 2.9%.
Our proven model predicts a likely earnings beat for the company this time around as well. CI has an Earnings ESP of +0.48% as the Most Accurate Estimate of $6.20 per share is currently pegged higher than the Zacks Consensus Estimate of $6.17. Also, it currently has a Zacks Rank #3 (Hold). The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 increases the chances of an earnings beat, which is precisely the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Also, the consensus estimate for first-quarter revenues of $56.6 billion indicates a 21.9% year-over-year increase, supported by premium rate hikes and organic growth.
Considering Investment: A Decision Guide
Cigna's significant growth potential, supported by its expanding portfolio, increasing market share, shareholder value-boosting initiatives, strategic acquisitions and partnerships, position it as an attractive investment opportunity. Add another earnings beat to that mix and you have a company, which is potentially up for another bull run.
Also, the forward 12-month price-to-earnings ratio of 12.1X, notably below the industry average of 15.3X, suggests that the stock is attractively priced for investors. However, as more people are resuming elective procedures, which were earlier paused due to pandemic-related restrictions, medical costs are rising. This will keep its profit growth potential under check. Considering total benefits and expenses, our model suggests massive growth for the first quarter, exceeding the $50 billion mark.
The Zacks Consensus Estimate for the medical care ratio stands at 81.9% for the quarter, reflecting a slight increase from the year-ago level of 81.3%. This suggests that a lower proportion of premiums likely remained after clearing claims.
In conclusion, while Cigna shows promise of exceeding earnings estimates in the first quarter and possesses strong long-term growth prospects with an attractive valuation, its increasing medical costs and medical care ratio warrant close monitoring from investors for now.
Other Stocks That Warrant a Look
Here are some other companies worth considering from the broader Medical space, as our model shows that these, too, have the right combination of elements to beat on earnings this time around:
Affimed N.V. (AFMD - Free Report) has an Earnings ESP of +11.40% and is a Zacks #2 Ranked player. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Affimed’s bottom line for the to-be-reported quarter indicates a 19.1% year-over-year improvement. The estimate remained stable over the past week. The consensus mark for AFMD’s revenues is pegged at nearly $1.8 million for the quarter.
IGM Biosciences, Inc. (IGMS - Free Report) has an Earnings ESP of +1.69% and a Zacks Rank #2.
The Zacks Consensus Estimate for IGM Biosciences’ bottom line for the to-be-reported quarter indicates a 36.8% year-over-year improvement. IGMS beat earnings estimates in three of the past four quarters and met once, with an average surprise of 6.1%.
Fresenius Medical Care AG (FMS - Free Report) has an Earnings ESP of +7.69% and is a Zacks #3 Ranked player.
The Zacks Consensus Estimate for Fresenius Medical’s earnings per share for the to-be-reported quarter is pegged at 26 cents per share, which increased by 2 cents in the past month. FMS beat earnings estimates in three of the past four quarters and missed once, the average surprise being 25.8%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.