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Can Cigna (CI) Sustain its Earnings Surprise Streak in Q4?

We expect Cigna Corp.CI to beat earnings expectations when it reports fourth-quarter and full-year 2016 results on Feb 2, before the opening bell.

Why a Likely Positive Surprise?

Our proven model shows that Cigna has the right combination of the two key ingredients to beat on earnings.

Zacks ESP:Earnings ESP , which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +2.3%. This is a major indicator of a likely positive earnings surprise for the company. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Cigna carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating estimates.

The combination of Cigna's favorable Zacks Rank and positive ESP makes us confident of an earnings beat on Feb 2.

Cigna Corporation Price and EPS Surprise

Cigna Corporation Price and EPS Surprise | Cigna Corporation Quote

Factors to Influence Q4 Results

Cigna's upcoming results are expected to demonstrate its continuing strong operating performance from the Global Health Care and Global Supplemental benefits business lines.

Cigna's U.S. individual business is likely to have experienced softness similar to the rest of the industry.

We expect the company to continue posting favorable results on solid revenue growth in government business, disciplined expense management and effective medical cost management.

However, we expect to see unfavorable results from the company's Disability business as it undertook modifications by investing additional resources in the upfront medical review of claims, which resulted in longer claim cycles, thereby increasing disability durations and claim inventory. This contributed significantly to the unfavorable financial impact in the first half of 2016 for this business and we expect an adverse impact in the fourth quarter as well.

Then again, Favorable medical utilization along with medical cost management are expected to contribute to the bottom line.

Moreover, the company's strong balance sheet, which enables share buyback, should support its results.

For the full year, Cigna expects consolidated revenues to grow in the mid-single-digit percentage range over 2015 results. Consolidated adjusted income from operations is in the range of approximately $2.025 billion to $2.095 billion, or $7.80 to $8.05 per share.

Other Stocks That Warrant a Look

Here are some other companies from the health care sector that you may consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Healthways, Inc. TVTY is expected to report fourth-quarter and full-year 2016 earnings results on Feb 23. The company has an Earnings ESP of +2.86% and a Zacks Rank #3. You can see the complete list of today's Zacks #1 Rank stocks here .

Molina Healthcare Inc. MOH has an Earnings ESP of +5.33% and a Zacks Rank #3. The company is expected to report fourth-quarter earnings results on Feb 13.

CVS Health Corporation CVS has an Earnings ESP of +0.60% and a Zacks Rank #3. The company is expected to report fourth-quarter and 2016 earnings results on Feb 9.

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Cigna Corporation (CI): Free Stock Analysis Report

Molina Healthcare Inc (MOH): Free Stock Analysis Report

CVS Health Corporation (CVS): Free Stock Analysis Report

Healthways, Inc. (TVTY): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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