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The Cigna Group (CI), with a market cap of about $95.5 billion, is a leading provider of insurance and healthcare services in the U.S. The company, headquartered in Bloomfield, Connecticut, operates through subsidiaries offering a broad spectrum of health-related products and services.
Companies valued at $10 billion or more are generally considered “large-cap” stocks, and Cigna fits this criterion perfectly, exceeding the mark. Cigna is recognized for its extensive range of managed healthcare and insurance services, specializing in medical, dental, disability, and life insurance products predominantly delivered through employer and group channels, bolstered by its prominent position in the Fortune 500.
However, the health insurance giant has slipped almost 6.7% from its 52-week high of $365.71, achieved on March 28. Shares of Cigna are down 4.7% over the past three months, underperforming the broader S&P 500 Index's ($SPX) 4.7% gains over the same time frame.
Longer term, CI is up 11% on a YTD basis, lagging behind SPX's 13.4% gains. However, shares of Cigna have surged 22.1% over the past 52 weeks, underperforming SPX's 23.8% returns over the same time frame.
To confirm the bearish price trend, CI has been trading below its 50-day moving average since May. But it has been trading above its 200-day moving average since mid-December.
Cigna’s outperformance over the past year can primarily be attributed to strategic corporate decisions such as abandoning a potentially dilutive merger with rival health insurer Humana Inc. (HUM) and announcing a $10 billion share buyback program. This major strategic decision was met positively by investors, underscoring confidence in Cigna's commitment to enhancing shareholder value through buybacks rather than pursuing large-scale acquisitions.
Yet, the stock fell nearly 3.6% on May 2 after its Q1 earnings results revealed a net loss of $277 million, stemming from a significant impairment charge related to its minority ownership in clinic operator VillageMD, despite reporting higher-than-expected adjusted profits.
Nevertheless, Cigna’s rival Humana is underperforming – not just CI but the broader equity benchmarks. Shares of Humana have declined 30.8% over the past 52 weeks and are down 22.5% on a YTD basis.
Despite the stock’s mixed price action, analysts are optimistic about CI’s prospects. The stock has a consensus rating of “Strong Buy” from the 22 analysts in coverage, and the mean price target of $394.43 is a premium of 17.4% to current levels.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
