Opinions
Andy Nasr
Cigna Corp.
CI-N
TOP PICK
Sep 20, 2016
$131.990
Stock price when the opinion was issued
Financial Services
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TOP PICK
US health insurance under pressure. Very cheap. Will benefit from next Democratic government when it makes Obamacare better. Retirees who are living off medicare, but want to buy extra insurance, will go to a company like Cigna. Best value without taking on drug pricing or pipeline risk. Huge tailwind in US healthcare space. Yield is 0.02%. (Analysts’ price target is $214.83)
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TOP PICK
Stockchase Research Editor: Michael O'Reilly CI provides healthcare insurance and services in the US and 30 countries worldwide. They have over 170 million customers. It trades at 15x earnings, compared to the peer average of 23x. Its PEG ratio is 0.95 with earnings growth exceeding 27% this year. Earnings are expected to grow over 10% annually for the next five years. It pays a dividend backed by a payout ratio of only 0.3%. We would buy this with a stop-loss at $167, looking to achieve $257 -- upside exceeding 22%. Yield 1.89% (Analysts’ price target is $257.25)
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PAST TOP PICK
(A Top Pick Feb 11/21, Up 22.5%)Stockchase Research Editor: Michael O'Reilly CI has achieved our objective of $257. To be disciplined we recommend covering 50% of the position and trailing up the stop from $167 to $245. This would all but guarantee a minimum investment return of 19% if triggered.
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PAST TOP PICK
(A Top Pick Feb 11/21, Up 16.8%)Stockchase Research Editor: Michael O'Reilly Our PAST TOP PICK with CI has triggered its $245 stop. We recommend covering the balance of the position at this time. Combined with the previous recommendation to cover 50%, this creates a total investment return over 19%
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TOP PICK
Healthcare is a unique performer during times of economic deceleration, providing defense and growth. Stable contract with US Defense Department. Share repurchase. 12x forward earnings, value name. 11% growth rate. Reports August 4. Yield is 1.65%. (Analysts’ price target is $295.36)
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TOP PICK
Shares are down because the market fears they will do a tie-up deal with Humana, but CI bowed out. This is good given Human's problems. Managers are excellent, making good deals. EPS grew 13% compounded annual growth rate from 2013-2023. Are buying back shares and pay a dividend.
(Analysts’ price target is $397.05)
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PAST TOP PICK
(A Top Pick Oct 29/24, Down 2%)
Sold last year, mainly because Trump administration announced seemingly negative measures toward HMO's in general and specific ones with pharmacy benefits managers. Common theme in the space is that margins are compressing. Overhang will go on for a few more quarters.
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A US health insurer provider, one of the largest. There is a pending deal. Aetna (AET-N) (?) wants to buy the company, and it is unlikely that deal gets approved. If the deal doesn’t get approved, the break fee is about $1.5 billion. On top of that, when you look at the cash they can deploy, they are going to have about $10 billion to play with. They can buy back a ton of stock if the deal does not go through. If it does go through, you still get 30% upside. Dividend yield of .03%.