On Jul 14, 2014, health insurer
) jumped to a 52-week high of $95.17 with 1.91 million shares
traded during the course of the session.
The rally in the stock was brought about by investor optimism on
the news that the company has reached its Accountable Care
Organization (ACO) goal for 2014 and received a positive rating
from Fitch. The company been also been performing consistently,
unfazed by the challenges grappling the health insurance industry.
Over the past year, the stock has soared 24% compared to a 17.5%
increase in the S&P 500.
Last week, Cigna announced that it has successfully reached its 100
ACO goal announced in 2012. Cigna will serve more than one
million members via these arrangements, thereby reducing the
overall medical cost and aiding its bottom line.
On Jul 10, Fitch Ratings upgraded Cigna's long-term IDR to 'A-'
from 'BBB+' and unsecured senior debt ratings to 'BBB+' from 'BBB.'
In addition, Fitch upped the Insurer Financial Strength ratings of
various Cigna subsidiaries to 'A+' from 'A.' The rating outlook was
Stable, and acknowledged strong operating performance by the
Cigna has been able to keep its earnings streak alive in the
challenging industry, by following an intelligent approach to
business which includes developing business organically as well as
inorganically. One good example of the company's inorganic growth
step was the acquisition of HealthSpring in 2012 that marked its
foray into government business. Two years down the line, results
reflect accrual from the deal in the form of higher earnings as
well as increased enrollment.
Investors are also encouraged by the steps taken by Cigna's step to
fortify its capital by addressing variable annuity and under-funded
pension obligation issues which has built its inherent strength.
Cigna is expected to release second-quarter earnings on Jul 31,
before the market opens. The Zacks Consensus Estimate for the
second-quarter earnings per share is pegged at $1.84, which
translates into year-over-year growth of 3.5%.
Cigna carries a Zacks Rank #3 (Hold). Better-ranked players include
CNO Financial Group Inc.
Radian Group Inc.
). All these stocks carry a Zacks Rank #2 (Buy).
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