Why Is Cigna Stock Trading Higher Today?

Cigna Group CI shares are trading higher after the company reportedly ended its attempt to negotiate an acquisition deal with rival Humana Inc HUM after the pair disagreed on price terms.

Instead, Cigna approved an aggregate increase of $10 billion in incremental share repurchase authorization, bringing the company's total share repurchase authority to $11.3 billion. 

The company intends to use most of its discretionary cash flow for share repurchase in 2024. 

Cigna expects this to include a repurchase of at least $5 billion of common stock between now and the end of 1H of 2024, with a portion of this repurchase to be executed via an accelerated share repurchase program conducted in Q1 2024. 

Based on their market values, a Cigna-Humana combination would have created a company with a value exceeding $140 billion.

Wall Street Journal notes that Cigna also held the belief that securing a deal would have been attainable from a regulatory standpoint, notwithstanding the current administration's stringent position on the deal.

In the short run, Cigna is shifting its attention to smaller acquisitions.

Cigna reaffirmed its previously provided outlook of full-year 2023 consolidated adjusted income from operations on a per share basis of at least $24.75 per share versus consensus of $24.83. 

The company continues to target consolidated adjusted income from operations on a per-share basis of at least $28 for FY24 compared to the consensus of $28.22.

Price Action: CI shares are up 13.6% at $293.89, and HUM shares are up 1.95% at $491.00 during the premarket session on the last check Monday.