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The Cigna Group (CI), headquartered in Bloomfield, Connecticut, provides insurance and related products and services. Valued at $89.4 billion by market cap, the company offers life, accident, disability, supplemental, medicare, and dental insurance products and services.
Shares of this healthcare insurance giant have underperformed the broader market considerably over the past year. CI has gained 14.1% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 30.6%. In 2024, CI’s stock rose 7.7%, compared to the SPX’s 23.6% rise on a YTD basis.
Narrowing the focus, CI’s outperformance is apparent compared to the iShares U.S. Healthcare Providers ETF (IHF). The exchange-traded fund has gained about 4.2% over the past year. The ETF’s performance remained unchanged on a YTD basis.
The underperformance of CI can be attributed to a decrease in its medical customer base, along with increasing total benefits and expenses.
On Oct. 31, CI shares closed up marginally after reporting its Q3 results. Its adjusted EPS of $7.51 exceeded Wall Street expectations of $7.22. The company’s adjusted revenue was $63.7 billion, beating Wall Street forecasts of $59.8 billion. CI expects full-year adjusted EPS to be $28.40.
For the current fiscal year, ending in December, analysts expect CI’s EPS to grow 32.3% to $28.50 on a diluted basis. The company’s earnings surprise history is impressive. It beat the consensus estimate in each of the last four quarters.
Among the 23 analysts covering CI stock, the consensus is a “Strong Buy.” That’s based on 17 “Strong Buy” ratings, two “Moderate Buys,” and four “Holds.”
The configuration is consistent over the past three months.
On Nov. 18, Wells Fargo & Company (WFC) analyst Steve Baxter maintained a “Hold” rating on Cigna with a price target of $370, implying a potential upside of 14.7% from current levels.
The mean price target of $397.05 represents a 23.1% premium to CI’s current price levels. The Street-high price target of $438 suggests an ambitious upside potential of 35.8%.
