On Friday, Cantor Fitzgerald updated its outlook on CIGNA Corporation (NYSE:CI), increasing the price target to $400 from the previous $384, while reaffirming its Overweight rating on the stock. The adjustment reflects a higher expected price-to-earnings (P/E) ratio for the year 2025, now set at 12.2 times up from 12 times, based on the forecasted earnings per share (EPS) of $32.47 for that year.
The new target suggests a 14% premium over the historical five-year average P/E ratio. This change underscores Cantor Fitzgerald's increased confidence in the earnings growth of Evernorth, CIGNA's health services segment. The firm's positive stance is supported by the belief that Evernorth will continue to contribute significantly to CIGNA's overall financial performance.
Cantor Fitzgerald's announcement also identified potential risks that could impact the achievement of the new price target.
These risks include the possibility of larger-than-expected employer give-backs due to contractual arrangements and low utilization rates, higher initial costs related to the launch of the CNC contract, challenges in further integrating Evernorth products into the commercial book, and the ability to realize returns on investments in VillageMD and other CIGNA venture investments.
The updated price target and rating are based on a thorough analysis of CIGNA's business prospects and market position. Cantor Fitzgerald's outlook remains positive, as indicated by the Overweight rating, suggesting that the firm believes CIGNA's stock will outperform the average return of the stocks the analyst covers over the next 12 to 18 months.
Investors and market watchers will continue to monitor CIGNA's performance, particularly regarding the growth of Evernorth and the realization of the company's strategic investments, as these factors have been highlighted as key to achieving the new price target.
InvestingPro Insights
Recent data from InvestingPro highlights CIGNA Corporation's (NYSE:CI) robust market position with a market capitalization of $97.57 billion and a forward-looking P/E ratio as of Q1 2024 at a moderate 14.85. This aligns with Cantor Fitzgerald's positive reassessment of CIGNA, considering the company's strong financial metrics and growth prospects. One InvestingPro Tip notes that CIGNA has maintained dividend payments for an impressive 43 consecutive years, with the latest dividend growth over the last twelve months reaching 25.0%. This consistent return to shareholders reflects a stable financial foundation and a commitment to investor value.
Moreover, CIGNA's revenue growth for the last twelve months as of Q1 2024 stands at 12.65%, with an even more remarkable quarterly growth rate of 23.23%. This indicates a solid trajectory in revenue expansion, likely contributing to Cantor Fitzgerald's confidence in the company's earnings growth. Another InvestingPro Tip suggests that CIGNA is trading at a low revenue valuation multiple, which could signal an attractive entry point for investors seeking value in the Healthcare Providers & Services industry where CIGNA is a prominent player.
For investors seeking more in-depth analysis and tips, InvestingPro offers additional insights on CIGNA, which can be accessed at https://www.investing.com/pro/CI. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, providing even more value as you navigate the complexities of the market.
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