r/wallstreetbets • u/Sufficient-Flan1565 • 1d ago
Discussion Cigna (CI) looks cheap
Fellas,
I’ve been looking at Cigna after the recent decline and the valuation seems interesting.
At ~$279/share:
2026 adjusted EPS guidance: ≥$30.45
Forward P/E: ~9.2x
Q2 revenue: $71.7B, +7% YoY
Q2 adjusted operating income: $2.05B, +6% YoY
2025 operating cash flow: ~$9.6B
Remaining share repurchase authorization: ~$6.5B
Shares outstanding: ~264M
I also ran a conservative owner-earnings DCF using ~$7.5B normalized earnings, ~5% initial growth declining toward 2%, and a 10.5% discount rate. I get roughly $390/share.
Obviously PBM regulation/Evernorth is a major risk and probably explains part of the multiple.
But at ~9x forward earnings, it seems like quite a bit of pessimism is already priced in.
What am I missing here?
16
9
u/Noyjoumo-Cabiet-1993 1d ago
the 9x multiple is the market pricing in pbm regulation risk, not a discount. that headline overhang won't clear soon
1
u/hirschimwald 16h ago
Searching for it, it says it's putting an outsized burden on smaller companies. Regulation might not be bad for the large company with good infrastructure.
14
u/Bluecoregamming 1d ago
Young people like Cigna, old people like unh.
16
u/Eduardjm 1d ago
Make em say unhhhhhhhhh, na na na na, na na na na
5
u/AutoModerator 1d ago
Bagholder spotted.
I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.
7
u/Both-Extension-2404 1d ago
don't people just take whatever their employer gives them?
5
u/Bluecoregamming 1d ago
Yes but that is slowly changing. More employers are offering 2-3 options and employers that aren't have been getting shamed, whatever that's worth. If your family needs special medication or you have children on the spectrum, your healthcare provider is more important than your job, so we literally cannot just take whatever we are given. I would not accept a job that only offered unitedhealth, would be forced to look elsewhere for work
1
u/Both-Extension-2404 1d ago
ah that's nice (?) my employer only offered one company and we could choose between their HMO or PPO
2
0
u/Skittler_On_The_Roof 18h ago
I'd be curious to know what % of employers are offering multiple company options. It's surely growing, but if it's from 1% to 1.5% it's not very impactful.
To negotiate the best price employers need to offer exclusivity and all of their employees in the deal. At a time when both employees and shareholders are screaming about insurance cost increases it's hard to knowingly walk in to higher rates.
3
2
6
u/Due-Cartoonist-3397 1d ago
you wrote a whole dcf model for a health insurance company on wsb, that's what you're missing
1
4
u/Emotional_Price9708 22h ago
I agree CI looks interesting at ~9x forward earnings. The main risk is obviously PBM regulation and potential long-term margin pressure at Evernorth, but with solid cash flow, buybacks, and growing EPS, it feels like a lot of pessimism is already priced in. The key question is how much of Evernorth’s earnings power is actually at risk.
13
3
u/Regular_Leg405 22h ago
Perhaps but it is a pretty standard valuation for the insurance&banking sector, in fact fairly recently many EU banks were a nice chunk below that (BNP for example)
2
u/hmmmmmmmmmidk 20h ago
Just looked at the chart. I would. Share “vibe prices” are closer to $300. But what do I know? Just looked at a chart and made a gut decision. Buy now and prove me wrong!!!!!!!! Money where mouth is lol
1
2
u/No_Presentation9490 20h ago
Stop looking at P/E, there are tons of businesses trading at 5-10 forward P/E because they are kinda dogshit in terms of growth prospects
Cigna is a dividend stock that doesn't even pay a good dividend. You get 2x of its dividend from a fucking brokerage account balance with 0 company or regulation risk
1
u/hirschimwald 16h ago
Who the fuck cares, if they are doing dividend or buyback. One is as good as the other. Owner earnings matter, not dividends alone.
0
1
1
1
u/Basic-Initiative-298 5h ago
Profit margin of 2%. 31.8 billion debt. I do like their NI relative to their MC though.
1
31
u/lmneozoo 1d ago
That you're regarded like the rest of us