Why Is Cigna (CI) Up 0.8% Since Last Earnings Report?

A month has gone by since the last earnings report for Cigna (CI). Shares have added about 0.8% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Cigna due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Cigna Q1 Earnings Beat Estimates

Cigna’s earnings of $4.69 per share surpassed the Zacks Consensus Estimate by 5.6% and also grew 20.3% year over year.

Cigna’s revenues of $38.4 billion beat the Zacks Consensus Estimate by 3.1% and also inched up 15% year over year owing to the acquisition of Express Scripts.

Among the revenue components, pharmacy revenues were $25.1 billion, almost flat year over year, premiums were up 8.7% year over year to $10.8 billion while fees decreased 11.1% to $2.2 billion.

The company’s medical enrollment grew by 225,000 lives from the prior-year quarter to 17.218 million customers, attributable to a solid footprint in Commercial, Government and International markets.

Selling, general and administrative expense ratio was 8.9, up 80 basis points year over year on significant growth in revenues and cost-control measures.

Segment Details

Health Services: Adjusted revenues of $27.2 billion were up 21% year over year, driven by growth in adjusted pharmacy script volumes including the insourcing of Integrated Medical pharmacy volumes and a strong performance in specialty pharmacy services.

Integrated Medical: Adjusted revenues of $9.86 billion were up 7.2% year over year, driven by an increase in Medicare Advantage as well as the Select segment.

International Markets: Adjusted revenues of $1.47 billion were up 5.5% year over year, reflecting continued business growth.

Capital Position

Cigna’s debt-to-capitalization ratio improved to 44.7 as of Mar 31, 2020 from 45.2 as of Dec 31, 2019.

Shareholders’ equity as of Mar 31, 2020 was $45.1 billion, up 6.3% year over year.

2020 Guidance Intact

The company kept its earlier-issued guidance for 2020 intact, indicating earnings per share to remain in the range of $18-$18.6 while adjusted revenues in the $154-$156 billion band.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

At this time, Cigna has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Cigna has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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