The Cigna Group CI is well-poised to grow on the back of strategic acquisitions and collaborations, and rising pharmacy revenues. Its diversified product portfolio, wide agent network and growing Evernorth business bode well.

Cigna, with a market cap of $100 billion, is a healthcare plan providing company in the United States with a wide range of products. CI provides pharmacy services, benefits management, care solutions, as well as data and analytics. These services are used by health plans, employers, healthcare providers and government organizations.

Courtesy of solid prospects, this Zacks Rank #2 (Buy) stock is worth adding at the moment.

Let’s delve deeper.

The Zacks Consensus Estimate for Cigna’s 2024 earnings per share (EPS) is pegged at $28.34, indicating a 13% year-over-year rise. The estimate remained stable over the past week. Adjusted EPS guidance for 2024 is anticipated to be a minimum of $28.25. Cigna expects to maintain average annual adjusted EPS growth in the range of 10-14% in the long term. The company beat earnings estimates in all the last four quarters, with the average surprise being 2.9%.

Cigna Group Price and EPS Surprise

Cigna Group price-eps-surprise | Cigna Group Quote

The consensus estimate for 2024 revenues is pegged at $235.1 billion, suggesting a 20.4% rise. Growing pharmacy revenues, premiums and fees are expected to boost the top line. We expect pharmacy revenues to rise 23.6% in 2024, along with a 9.2% jump in premiums. The company expects adjusted revenues at a minimum of $235 billion in 2024.

Cigna’s membership has been growing for the past few quarters, and the trend is expected to continue due to the expansion of its customer base within its U.S. Commercial business. We expect Individual and Family Plans, small and middle market medical customers to grow 0.1%, 0.8% and 0.6%, respectively, in 2024. Cigna expects long-term average annual adjusted income growth in the range of 7%-10% in its Cigna Healthcare segment. Long-term average margins are expected to be in the range of 10.5-11.5%.

Cigna’s Evernorth segment also remains well-poised for growth on the back of improved pharmacy benefits, care services and specialty performance. CI expects long-term average annual adjusted income growth between 5% and 8%. It also expects the pharmacy benefit services business to win 270 new clients in 2024. CI recently unveiled new offerings like EncricleRx and Evernorth Behavioral Care Group, improving the segment’s prospects.

The company’s acquisitions like Express Scripts and collaborations, including those with CarepathRx, Virgin Pulse, VillageMD and others, continue to expand its portfolio and capabilities. These enable the company to provide customers with a holistic range of healthcare solutions. Value enhancing initiatives, such as divesting loss-making operations, are expected to improve efficiency in the future. In January 2024, CI divested its Medicare Advantage Unit to Health Care Services for $3.3 billion. This move came after the business could not reach its long-term target margins due to high administrative expenses. Capital freed from this transaction is expected to be clawed back to invest in its core business of employer-sponsored coverage.