On Jul 5, 2013, shares of
) hit a 52-week high of $73.95. The momentum was driven by the
company's favorable operating results over the past many
quarters, a differentiated growth strategy and the strength of
its diverse portfolio of businesses are other factors.
Cigna is uniquely poised for long term growth given its
exposure to strong growth areas, relative protection from
healthcare reform and diversification into a number of
Cigna is performing well in its business segments. In
commercial health care, the company has continuously grown its
target markets by achieving strong customer retention, expanding
its existing customer relationships and adding new customers.
In the Global Supplemental Benefits business, Cigna delivered
a healthy increase in revenue and earnings, reflecting solid
customer growth, effective cost management and contributions from
We also view Cigna's more significant International exposure
favorably and see the company as having lower direct exposure to
key health reform risks given its limited exposure to the
Cigna is also poised for significant earnings accretion in
2013 from its recent acquisition of HealthSpring as well as a
strategic decision on its captive pharmacy Benefits Management
Additionally we are impressed with the company's recent
transaction to exit from the Run-Off Reinsurance segment. This
step will reduce the company's future earnings volatility.
Cigna has also been delivering positive earnings surprise for
past many quarters. For the second quarter the Zacks Consensus
Estimate for EPS stands at $1.59, reflecting 4.6% year over year
increase. The long term earnings growth is expected to be 11.3%.
Valuation for Cigna looks reasonable. The shares are trading
in-line with the peer group average on a forward
price-to-earnings basis and at premium on a price-to-book basis
with return on equity higher than the peer group average. The
1-year return from the stock came in at 73.8%, much above the
S&P's return of 20.5%.
Cigna carries a Zacks Rank #2 (Buy). Multi-line insurers
Assured Guaranty Ltd.
Hartford Financial Services Group Inc.
FBL Financial Group Inc.
) all carry Zacks Rank #2 (Buy) and are worth considering.
ASSURED GUARNTY (AGO): Free Stock Analysis
CIGNA CORP (CI): Free Stock Analysis Report
FBL FINL GRP-A (FFG): Free Stock Analysis
HARTFORD FIN SV (HIG): Free Stock Analysis
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