On Jan 7, Zacks Investment Research upgraded
) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Cigna has been witnessing rising earnings estimates on the back
of strong results, an enhanced guidance for 2013 and efforts
taken to boost its operating profile. This health insurer has
delivered positive earnings surprises in each of the past four
quarters with an average beat of 13.6%.
Cigna boasts superior operating performance, along with a
diversified business profile. The company has forayed into the
much sought-after business of serving the senior population with
the acquisition of HealthSpring.
Cigna has improved its business profile by entering into
reinsurance transaction with
Berkshire Hathaway, Inc.
Cigna has also made a move forward by improving its debt profile.
It has brought down its leverage ratio that traditionally stayed
around 45%, to about 41% as of Sep 30, 2013. Steps taken by the
company such as freezing of pension plans and making higher
contribution to reduce the unfunded liability has bettered the
company's leverage ratio.
Cigna also remains more reform-resistant than its peers,
primarily because 85% of its U.S. healthcare business comprises
administrative services only (ASO). This limits the company's
exposure to unanticipated increase in medical utilization.
Other positives are limited exposure to risk associated with
health insurance exchanges, a well-diversified product profile,
and a growing membership base along with niche market presence in
The Zacks Consensus Estimate for 2014 inched up 0.6% to $7.31 per
share, translating into year-over-year growth of 6.6%. The
expected long-term earnings growth rate of the stock is 11.2%.
The company is scheduled to release fourth quarter and full-year
2013 earnings on Feb 7. The Zacks Consensus Estimate for earnings
is currently pegged at $1.48 per share for the fourth quarter and
at $6.86 per share for 2013.
Other Stocks to Consider
Other insurance stocks worth considering include
American International Group Inc.
CNO Financial Group, Inc.
). Both these carry the same Zacks Rank as Cigna.
AMER INTL GRP (AIG): Free Stock Analysis
BERKSHIRE HTH-B (BRK.B): Free Stock Analysis
CIGNA CORP (CI): Free Stock Analysis Report
CNO FINL GRP (CNO): Free Stock Analysis
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