Cigna reportedly is giving up efforts to merge with rival health insurer Humana and instead hiking its buyback program. CI stock gapped up above its 200-day line Monday.
Cigna and Humana couldn't agree on a deal price or terms, The Wall Street Journal reported Sunday. The WSJ had reported on Nov. 29 that the health insurers were in talks for a deal.
The companies never confirmed the talks, but Cigna stock and Humana stock tumbled on Nov. 29 and beyond.
Cigna Stock Buyback
Cigna hiked its shares repurchase program by $10 billion on Sunday, increasing its buyback authority to $11.3 billion. That's equal to 14.9% of shares outstanding at Friday's closing price.
Cigna plans to buy back at least $5 billion worth of shares by June 30, 2004. Some of that will be done via an accelerated share repurchase program conducted in Q1 2024.
"We believe Cigna's shares are significantly undervalued," Chairman and CEO David Cordani said in a statement announcing the CI stock buyback.
The health insurer also reaffirmed its 2023 target for earnings per share of at least $24.75 and 2024 EPS of at least $28. Analysts expect $24.83 for 2023 and $28.21 for next year, according to FactSet.
While not confirming Humana takeover talks, Cordani said Cignal "will consider bolt-on acquisitions" vs. a major deal.
CI Stock
CI stock tumbled 8% on Nov. 29, following the initial WSJ report of Cigna-Humana talks. HUM stock skidded 5.5%. Shares have continued to trend lower. Cigna stock hit a six-month low on Friday before reversing to close up 0.3% to 258.80.
On Monday, Cigna jumped 167%, moving above its 200-day line and more than recouping all its losses on the initial Humana talks report. HUM stock fell 1%.
Please follow Ed Carson on X/Twitter at @IBD_ECarson, Threads at @edcarson1971 and Bluesky at @edcarson.bsky.social for stock market updates and more.
