We came across a bullish thesis on The Cigna Group (CI) on Twitter by Tsachy Mishal. In this article, we will summarize the bulls’ thesis on CI. The Cigna Group (CI)’s share was trading at $280.97 as of Jan 16th. CI’s trailing and forward P/E were 26.63 and 8.92 respectively according to Yahoo Finance.
Valeri Potapova/Shutterstock.com
Cigna (CI) stands out as a top pick for 2025. The company operates with a reliable, steady business model that has proven more predictable than many of its peers in the health insurance industry. While the sector has become less cyclical, Cigna’s business is even less prone to fluctuations, making it a stable investment. Trading at just nine times expected 2025 earnings, Cigna is poised to deliver strong returns, especially considering its plans for substantial share repurchases. In 2024, Cigna is on track to repurchase $7 billion worth of shares, and in 2025, it expects to increase that figure to $9–$10 billion, potentially buying back 12% of its shares at the current price. This aggressive buyback strategy underscores the company’s commitment to enhancing shareholder value.
Cigna’s market cap stands at $78 billion, and in Q1 2025, the company will close on the sale of a business for $3.7 billion, with the majority of the proceeds earmarked for additional share repurchases. Despite its consistently strong performance over the years, Cigna’s stock is currently trading at a lower valuation, partly due to a 22%+ drawdown triggered by a tragic incident involving the CEO of a rival health insurer. However, the broader political landscape and the likelihood that Congress won’t prioritize forcing insurers to separate their pharmacy benefit managers (PBMs) suggest that Cigna’s business model will remain largely unaffected. Even in the unlikely event that PBM spin-offs are mandated in the future, much of the potential downside is already priced in, with Cigna’s current low valuation offering an attractive entry point for investors. The company’s successful acquisition of Express Scripts for $54 billion and its aggressive share repurchase program, which has reduced its share count by over 27% since 2019, further support the case for significant long-term upside.
The Cigna Group (CI) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 66 hedge fund portfolios held CI at the end of the third quarter which was 66 in the previous quarter. While we acknowledge the risk and potential of CI as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article was originally published at Insider Monkey.