We expect multiline insurer
) to beat expectations when it reports second-quarter 2014 results
before the opening bell on Jul 31
Why a Likely Positive Surprise?
Our proven model shows that Cigna is likely to beat earnings
because it has the right combination of key factors.
, which represents the difference between the Most Accurate
estimate and the Zacks Consensus Estimate, is +1.08%. This is a
meaningful and leading indicator of a likely positive earnings
surprise for this company.
Cigna carries a Zacks Rank #3 (Hold). The stocks with Zacks
Ranks #1, 2 and 3 have a significantly higher chance of
beating earnings. The Sell-rated stocks (#4 and 5) should never be
considered going into an earnings announcement.
The combination of Cigna's Zacks Rank #3 (Hold) and +1.1% ESP make
us confident of an earnings beat on Jul 31.
What is Driving Better-than-Expected Earnings?
We expect Cigna's earnings to see continued momentum in the
international segment. The expat business, where Cigna is the
market leader having presence in 30 countries is also expected to
continue to see growth thanks to increasing globalization.
During the quarter, Cigna reached its Accountable Care Organization
(ACO) goal for 2014, which will help in reducing its medical cost
and aid in bottom line growth.
However, the impact of industry fees as mandated by Health Care
Reform will increase operating expense and erode earnings.
Moreover, increase in medical utilization as expected will increase
the company's claim cost thereby restricting earnings growth.
Cigna's use of capital for share buyback will provide an extra
cover to earnings.
In the last quarter, this health insurer delivered a 19.6% positive
earnings surprise. The average beat for the trailing four quarters
Other Stocks to Consider
Here are some companies in the health care space worth considering
as our model shows they have the right combination of elements to
post an earnings beat this quarter.
Wright Medical Group Inc. (
) has an Earnings ESP of +8.9% and carries a Zacks Rank #2 (Buy).
Genomic Health Inc. (
) has an Earnings ESP of +14.3% and carries a Zacks Rank #3.
Cardinal Health, Inc. (
) has an Earnings ESP of +1.2% and carries a Zacks Rank #3.
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CIGNA CORP (CI): Free Stock Analysis Report
WRIGHT MEDICAL (WMGI): Free Stock Analysis
CARDINAL HEALTH (CAH): Free Stock Analysis
GENOMIC HEALTH (GHDX): Free Stock Analysis
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