CI
Cigna Corp.
Healthcare
06/20/2023
Presented
| Date | 06/13/2023 |
| Price | $272.25 |
| Market Cap | $80.55B |
| Ent Value | $109.04B |
| P/E Ratio | 12.42x |
| Book Value | $150.19 |
| Div Yield | 1.73% |
| Shares O/S | 295.87M |
| Ave Daily Vol | 1,838,104 |
| Short Int | 0.80% |
Current
| Price | $348.84 |
| Market Cap | $97.52B |
| The Cigna Group is engaged in the provision of global health services. It operates through the following segments: Evernorth, U.S. Medical, International Markets, and Group Disability and Other. The Evernorth segment includes a broad range of coordinated and point solution health services, including pharmacy solutions, benefits management solutions, care solutions and intelligence solutions. The U.S. Medical segment includes Cigna's U.S. Commercial and U.S. Government businesses that provide comprehensive medical and coordinated solutions to clients and customers. The International Markets segment includes supplemental health, life and accident insurance products and health care coverage in international markets, as well as health care benefits to globally mobile employees of multinational organizations. The Group Disability and Other segment represents group disability and life, corporate-owned life insurance, and run-off business consisting of reinsurance, settlement authority, and individual life insurance and annuity and retirement benefits business. The company was founded in 1792 and is headquartered in Bloomfield, CT. |
Publicly traded companies mentioned herein: Centene Corp (CNC), Cigna Group/The (CI)
Highlights
The presenter is long shares of The Cigna Group (CI), which he describes as a healthcare services conglomerate with ~60% of profits attributable to its PBM business and related offerings following the 2018 merger with Express Scripts. At $269 per share, CI trades at 9.5x and 8.5x the Street’s EPS forecasts for 2024 ($28.23) and 2025 ($31.71), respectively. He sees upside to earnings and valuation based on the premises that PBM regulatory risks are overstated, CI’s PBM business is underappreciated, and there are two growth drivers over the next 12 – 18 months (biosimilars wave & Centene contract win) that can accelerate EPS growth from a single-digit rate this year to the high teens in 2024 and 2025 (vs. low teen consensus 2024 – 2025 EPS growth). He models $34.50 of 2025 EPS, and in that scenario would expect multiple expansion to 15x – 20x earnings; underwriting a 15x valuation on his 2025 EPS creates a $517.50 price target.
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