Cigna To Gain From Pharmacy Benefit Management Assets, Analyst Says, Upgrading The Stock To 'Strong Buy'

Raymond James analyst John W. Ransom upgrades The Cigna Group CI from Outperform to Strong Buy, reiterating the price target of $350.
With an improving regulatory backdrop, Cigna, which has outperformed multiple policy overhangs, will benefit from the new Medicare Advantage (MA) Capitation Rates released recently. This will be an overall win for the industry as well.
The analyst notes that the company's pharmacy benefit management assets are well-positioned to have a strong 2023, with expectations of a 5% growth in EBIT year-over-year.
Cigna will also benefit from the ramping of the pharmacy benefit management contract from Centene Corporation CNC.
The analyst thinks Cigna stock is currently "de-risked at current levels" as it is underperforming the broader market year-to-date, thus presenting "attractive entry points" with double-digit long-term earnings growth algorithms.
The analyst expects modeling revenue of $244 billion in 2025 and adjusted earnings per share of $31.50, representing 12% growth year-over-year.
For 2025, the U.S. Healthcare adjusted EBT is expected to be $5.2 billion and Evernorth adjusted EBT of $7.7 billion, representing 8% growth.
Price Action: CI shares are trading higher by 3.12% at $264.55 on the last check Wednesday.