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On Wednesday, Bernstein analysts increased their price target for Cigna Corporation (NYSE:CI) shares from $323.00 to $373.00, while maintaining a Market Perform rating. The healthcare giant, with a market capitalization of $89.18B and impressive year-to-date returns of 21.48%, announced first-quarter 2025 earnings with an adjusted EPS of $6.74, surpassing consensus estimates by 6%. According to InvestingPro analysis, Cigna currently appears undervalued based on its Fair Value calculations. The healthcare company also boosted its 2025 EPS guidance by $0.10 to at least $29.60, attributing the raise to the delayed completion of the sale of its Medicare Advantage (MA) business.
Cigna’s solid first-quarter performance was highlighted by the timing of the MA sale, which contributed to the earnings beat. The company’s updated guidance reflects the impact of the sale occurring later than initially planned. Bernstein’s analysts note that Cigna is well-positioned to capitalize on the growth in specialty pharmacy and that its pharmacy benefit manager (PBM) is strategically set up to deliver cost savings on new drug innovations, capturing value in the process.
Despite the positive outcomes in the quarter, Bernstein expressed concerns regarding Cigna’s growth potential in the Healthcare business. The firm pointed out the absence of MA or Medicaid exposure and the resulting dependence of Evernorth, Cigna’s health services segment, on contracts with Centene Corporation (NYSE:CNC), Prime Therapeutics, and Health Care Service Corporation (HCSC). These contracts account for approximately 40% of prescription volume, in contrast to less than 10% coming from Cigna Healthcare. The company maintains a steady 1.81% dividend yield and has demonstrated consistent dividend growth, with payments maintained for 44 consecutive years. Discover comprehensive analysis of Cigna and 1,400+ other stocks through detailed Pro Research Reports available on InvestingPro.
The new price target of $373 reflects a modest reduction in policy risk, according to the Bernstein analyst. Cigna’s performance and revised earnings outlook provide a backdrop for the company’s current market valuation. However, the Market Perform rating indicates that while the stock may be fairly valued at present, the concerns about the Healthcare business’s growth potential without MA or Medicaid exposure are significant factors in Bernstein’s outlook. The company maintains strong financial metrics, with a low P/E ratio relative to its near-term earnings growth potential, as highlighted in InvestingPro’s detailed analysis.
In other recent news, Cigna Corporation reported impressive first-quarter 2025 financial results, significantly surpassing Wall Street expectations. The company achieved an adjusted earnings per share (EPS) of $6.74, exceeding the forecast of $6.35, and reported revenue of $65.5 billion, well above the anticipated $60.38 billion. Following these results, Cigna raised its full-year EPS guidance to at least $29.60. Analyst firms have responded positively to Cigna’s performance; Raymond (NSE:RYMD) James raised its price target for Cigna to $385, maintaining a Strong Buy rating, while Jefferies increased its target to $397, reiterating a Buy rating. Both firms highlighted Cigna’s strong Specialty segment and its strategic positioning in the market.
Cigna’s Healthcare division reported earnings of $1,287 million, surpassing Raymond James’ estimate by $137 million, while the Evernorth segment also exceeded expectations with earnings of $1,434 million. The company has completed the divestiture of its Medicare business, which contributed to the quarter’s earnings. Analysts have noted that Cigna’s conservative guidance for the second quarter might not fully reflect the company’s momentum, particularly in the Evernorth segment. Cigna’s management has indicated that the stop-loss business is performing as expected, with favorable outcomes in surgical activity and a firm pricing outlook.
Overall, Cigna’s strategic initiatives, including the launch of biosimilars and GLP-1 drug management solutions, are expected to drive continued growth. The company’s focus on operational efficiency and strategic divestitures has positioned it well against industry trends, particularly in the growing specialty drug market.
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