Recommendation Change
Raymond James downgraded Cigna Group to Outperform from Strong Buy and reduced its price target from $350 to $320, citing a lack of near‑term catalysts as growth moderates and its pharmacy benefit management (PBM) business faces ongoing headwinds.
Valuation and Outlook
The brokerage noted that Cigna trades at approximately 8.3 times its 2027 earnings estimate and offers an estimated 13% free‑cash‑flow yield. It expects earnings growth to accelerate to around 10% in 2027 as PBM pressures ease, the stop‑loss business is fully repriced, and share repurchases increase.
Recent Performance
Cigna reported adjusted earnings per share of $7.78 for the second quarter, beating consensus estimates by $0.18. The medical loss ratio came in at 84.5%, better than expectations. Management modestly raised its 2026 adjusted EPS guidance to at least $30.45, up from $30.35, while keeping its medical loss ratio outlook unchanged.
Segment Outlook
Raymond James projects that GLP‑1 prescription volumes will slow in the second half of 2026 as commercial coverage declines, but rising biosimilar and generic drug volumes in the specialty pharmacy segment should partially offset this pressure. The firm continues to model adjusted EPS of $30.50 for 2026, $33.50 for 2027, and $37.00 for 2028.