We are reiterating our Neutral recommendation on
) following the second quarter results, which included a 12%
positive earnings surprise. Over the past four quarters, this
health insurer delivered positive surprise with an average beat
of 16%. Cigna carries a Zacks Rank #2 (Buy).
On Aug 1, Cigna reported second-quarter 2013 net operating
earnings of $1.78 per share, which outpaced the Zacks Consensus
Estimate of $1.59 per share. Moreover, the results surged nearly
19% year over year.
Better-than-expected results came on the back of improved
top-line, favorable operating expenses and medical costs.
Cigna has a well diversified business profile with reach in
different markets and a broad product portfolio.
Moreover, Cigna has strengthened its market position through
strategic acquisitions, most notably HealthSpring.
The company also has significant overseas business which is
generating strong earnings.
Cigna's strong results reflect its solid balance sheet and
free cash flow outlook for 2013. The company is comfortably
poised to further enhance shareholder value.
Also, Cigna continues to strengthen its physician partnerships
through more than 66 Collaborative Accountable Care
On the flip side, Cigna is witnessing a decline in margin in
its health care and disability segments due to a challenging
market place. We expect the trend to continue over the near term
as the health insurance market place undergoes significant
changes in the face of the Health Care Reform.
Cigna has been witnessing rising earnings estimates. Over the
last 60 days, the Zacks Consensus Estimate for 2013 moved up by
2.8% to $6.62 as 11 out of 12 estimates moved north. The same for
2014 rose 2.1% to $7.16 as 10 of 12 estimates were raised over
the same time frame. The expected long term earnings growth is
Eastern Insurance Holdings, Inc.
FBL Financial Group Inc.
) under our coverage carry Zacks Rank #1 (Strong Buy) and are
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