Cigna Remains One Of Our Favorite LT Names In The MCO Group, Says Deutsche Bank
In a research report issued today, Deutsche Bank analyst Scott Fidel maintained a Buy rating on Cigna (NYSE:CI) with a $105 price target, following Deutsche’s non-deal road show with CI’s CFO and IR professional.
Fidel noted, “The bulk of the meetings focused on Cigna’s differentiated growth strategy and business model that has generated superior EPS growth and returns relative to MCO peers over the past 5 years. CI’s NT commentary sounded largely neutral as MGMT continues to see cost trends as well controlled in core employer business but also cited ongoing margin pressure in public exchange segment. CI remains one of our favorite LT names in the MCO group due to above-average EPS growth, industry-leading returns, lower risk profile, and discounted valuation to peers.”
The analyst continued, “Over the past five weeks we hosted a series of investor roadshows and field trips with UnitedHealth, Aetna, and Cigna. Cigna’s CFO emphasized four key messages during our Europe roadshow that underpin the investment thesis in the stock: 1) strong growth momentum with CI producing a leading 4-yr revenue and EPS growth CAGR of 15% among large cap MCOs; 2) clarity of strategy and strength in execution; 3) diversified business model and differentiated growth drivers such as Intl and Group Insurance; and 4) strong margins driving superior returns and FCF generation. CI reaffirmed its comfort with its LT 10-13% EPS growth target and sustainable ROE near the 20% area.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Scott Fidel has a total average return of 12.8% and a 75% success rate. Fidel has a 20.5% average return when recommending CI, and is ranked #385 out of 3318 analysts.