Piper Sandler has started reporting on Cigna Corporation CIa diversified managed care and health care delivery organization specializing in commercial insurance markets and pharmacy services.
The analyst writes: “We believe Cigna has a unique and defensible leadership position in the fast-growing specialty pharmacy market, which, together with the company’s insurance segment and core PBM business, should support LT-adjusted EPS growth of 10-14% on average annually.”
Related: Cigna significantly exceeds estimates for the first quarter: Revenue increases rapidly thanks to the explosive growth of Evernorth.
The Cigna Healthcare and Evernorth Health Services businesses complement each other and enable Cigna to continue to deliver premium-adjusted EPS growth against its LT target of 10-14% per year, the Piper analyst writes.
Cigna grew adjusted earnings per share by an average of over 13% per year between 2013 and 2023, and the company is expected to continue its track record of consistently delivering industry-leading earnings growth targets over the next decade.
Piper adds, “We believe CI will focus on organic earnings growth until we know the outcome of the 2024 presidential election and have a better understanding of the antitrust/MA regime for the next four years.”
Piper starts with an Overweight rating and a price target of $400.
A multiple of 12.5 is appropriate because it assigns an inline or slightly higher multiple to the peer group, which Piper says is justified by Cigna’s above-average earnings per share CAGR.
The analyst also writes that the sale of the Medicare Advantage business to HCSC will be a positive catalyst for Cigna when completed in the first quarter of 2025.
Piper says Cigna’s strong position in the $400 billion specialty market is encouraging. While many are grappling with the drug pricing crisis, Cigna is at the forefront.
Specialty services are driving Evernorth’s growth, supported by Cigna’s transparent PBM business. We are confident that Evernorth can expect 5-8% growth over the long term.
Continue reading: Arthritis patients – Cigna’s Evernorth offers Humira biosimilar with no copayment.
Price promotion: CI shares fell 0.41% to $337.41 at last check on Wednesday.
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