Dj Cigna Group Stock Outperforms Competitors Despite Losses On The Day

Shares of The Cigna Group CI jumped 7.3% yesterday after it clarified in a press release that it's not pursuing a merger with Humana Inc. HUM. Recent speculation suggested a possible merger deal due to a potentially more business-friendly environment following the presidential election.

However, Cigna put these rumors to rest, clarifying that its M&A criteria includes only acquisitions that are strategically aligned, financially attractive and have a high likelihood of closing. The stock price jump indicates investor support for this clear strategic stance.

In contrast, rival Humana’s shares dropped 2% as Cigna’s announcement cooled any optimism surrounding a potential merger. Humana’s business is currently facing challenges from higher-than-expected claims and lower-than-anticipated government payment rate increases. Additionally, the quality rating of Humana’s largest Medicare Advantage plan was recently downgraded by the government, which will likely impact the quality bonuses the company stands to receive.

CI’s Reaffirmed Outlook

With speculation about a merger now settled, Cigna investors can shift their focus to the company’s projected growth for this year rather than speculating about its future direction. CI reaffirmed its 2024 outlook, projecting full-year adjusted EPS to be a minimum of $28.40. This indicates growth of at least 13.2% from the 2023 figure. The company also estimates adjusted EPS growth of at least 10% in 2025, reinforcing confidence in its growth trajectory.

CI’s Buybacks

The company is expected to continue its efforts to enhance shareholder value through share repurchases. So far this year, Cigna has bought back $6 billion worth of stocks, including $1 billion in the current quarter. It intends to maintain the buybacks through the remainder of this quarter and into next year. It plans to use most of the proceeds from the anticipated first-quarter 2025 sale of its Medicare businesses for additional buybacks. It currently has $5.3 billion left under its share repurchase fund.

CI’s YTD Price Performance

Shares of Cigna have gained 14.6% in the year-to-date period compared with the 9.9% rise of the industry it belongs to.

The Dow Jones Industrial Average closed above 44,000 for the first time Monday, while the S&P 500 topped 6,000 for its own closing milestone as markets awaited key inflation data and corporate earnings due later this week.

The Dow advanced 0.7% to 44,293.1, while the S&P 500 rose 0.1% to 6,001.4 and the Nasdaq Composite climbed 0.1% to 19,298.8. The trio of indexes extended rallies to records following Donald Trump's victory in the 2024 US presidential election last week.

Among sectors, consumer discretionary led the gainers, while technology posted the biggest drop.

Official data are expected to show Wednesday that US consumer inflation in October rose 0.2% sequentially and 2.4% annually, according to a Bloomberg-compiled consensus.

Core inflation, which excludes volatile food and energy components, is seen accelerating 0.3%, Morgan Stanley said. "However, we think the strength is in large part just short-run noise (amid a) temporary acceleration in cars due to the recent hurricanes and short-lived payback in shelter after the weak print in September," the report said.

Official producer prices data for last month are scheduled to be released Thursday.

Home Depot , Cisco , Walt Disney and AstraZeneca are among the companies scheduled to quarterly financial results later in the week.

In company news Monday, Tesla shares jumped 9%, the biggest gain on the Nasdaq and among the largest on the S&P. The electric vehicle maker's artificial intelligence opportunity will likely get fast-tracked under the Trump administration, Wedbush Securities said.

Cigna Group shares increased 7.3%, among the top S&P 500 gainers, after the health insurer said it is not pursuing a combination with Humana and is on track to meet its full-year earnings target. Humana shares fell 2%.

Salesforce shares rose 6.2%, the biggest gain on the Dow, as Jefferies adjusted its price target on the stock to $400 from $350 while maintaining its buy rating.

AbbVie said its two phase 2 trials assessing emraclidine in adult patients with schizophrenia and acute exacerbation of psychotic symptoms didn't meet their primary goals. The company's shares slumped 13%, the second-steepest decline on the S&P.

Celanese shares fell 7.3%, among the biggest declines on the S&P, after rating downgrades at UBS and BMO Capital.

West Texas Intermediate crude oil fell 3.1% to $68.22 a barrel Monday. Prices dropped as the threat of a supply disruption from storm Rafael in the US Gulf of Mexico eased, while China's recent stimulus plan disappointed investors, Reuters reported.

US bond markets were closed Monday for Veterans Day.

Gold dropped 2.4% to $2,629.80 per troy ounce, while silver lost 2.1% to $30.8 an ounce.

The S&P 500 Index Monday closed up +0.10%, the Dow Jones Industrials Index closed up +0.69%, and the Nasdaq 100 Index closed down -0.05%.

Stocks on Monday settled mixed, with the S&P 500 and the Dow Jones Industrials posting new all-time highs. The broader market extended last week’s post-election gains on speculation President-elect Trump will boost corporate profits through tax cuts and reduced regulation. Also, Tesla rallied more than +8%, adding to last week’s +26% surge on speculation that the company would benefit from a Trump presidency. In addition, cryptocurrency-related stocks soared Monday on speculation digital assets will benefit from the Trump administration’s pro-crypto policies. Trading activity in equities was below average on Monday, with the cash treasury market closed for the Veterans' Day holiday.

On the negative side, chipmakers retreated Monday to drag the Nasdaq 100 Stock Index lower. Also, Minneapolis Fed President Kashkari said a strong US economy and higher productivity growth could lead policymakers to reduce interest rates less than expected over the coming months.

The price of Bitcoin Monday closed down by -12 ticks. The 10-year T-note yield did not trade Monday with the cash Treasury market closed for the Veteran’s Day holiday. Hawkish comments from Minneapolis Fed President Kashkari weighed on T-notes when he said a strong US economy and higher productivity growth could lead policymakers to reduce interest rates less than expected over the coming months. Also, Monday’s rally in the S&P 500 to a new record high reduces safe-haven demand for T-notes and is undercutting T-note prices.

European government bond yields on Monday moved lower. The 10-year German bund yield fell to a 1-1/2 week low of 2.311% and finished down -4.1 bp to 2.327%. The 10-year UK gilt yield dropped to a 1-week low of 4.407% and finished down -1.0 bp to 4.425%.

ECB Governing Council member Holzmann said he sees "no reason" for the ECB not to cut interest rates at its December policy meeting, but a cut is not guaranteed.

ECB Governing Council member Stournaras said, "Now that inflation is coming down, we've started to lower interest rates, which looks like we're going to continue lower and could end up close to 2% around next September."

Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at its December 12 policy meeting and at 18% for a -50 bp rate cut at the same meeting.

US Stock Movers

Bristol Myers Squibb closed up more than +10% to lead gainers in the S&P 500 after rival AbbVie sank when it said its two mid-stage trials of its investigative treatment for adults with schizophrenia missed their primary endpoints, which may boost demand for BMY’s Cobenfy drug for the mental disorder.

Tesla closed up more than +8% at a 2-1/2 year high to lead gainers in the Nasdaq 100. Tesla is adding to last week’s +26% surge on expectations that the incoming Trump administration will support the company. Also, Wedbush raised its price target on the stock to $400 from $300 and said, “A Trump White House will be a game-changer for the autonomous and AI story for Tesla and Musk over the coming years.”

Cryptocurrency-linked stocks rallied sharply Monday, with the price of Bitcoin surging more than +14% to a new record high. As a result, Coinbase Global , Bit Digital , MicroStrategy , MARA Holdings , and Riot Platforms closed up more than +17%.

Cigna Group closed up more than +7% after confirming it is not pursuing a combination with Humana and is expecting to reaffirm projected 2024 adjusted income from operations of at least $28.40 a share and adjusted EPS growth of at least 10% in 2025.

Salesforce closed up more than +6% to lead gainers in the Dow Jones Industrials after CEO Benioff said the company will hire 1,000 workers to capitalize on the “amazing momentum” for the company’s AI product.

RadNet closed up more than +20% after reporting Q3 revenue of $461.1 million, better than the consensus of $441.5 million, and announced a collaboration with GE HealthCare on the adoption of AI imaging.

Winnebago Industries closed up more than +6% after Northcoast Research upgraded the stock to buy from neutral with a price target of $75.

Fortinet closed up more than +5% after HSBC upgraded the stock to buy from hold with a price target of $111.

Chip stocks retreated Monday to weigh on the Nasdaq 100. Intel and Microchip Technology closed down more than -4%. Also, KLA Corp , ARM Holdings Plc , and NXP Semiconductors NV closed down more than -3%. In addition, Lam Research , Micron Technology , GlobalFoundries , Analog Devices , and Broadcom closed down more than -2%.

Monolithic Power Systems closed down more than -14% to lead losers in the S&P 500 after Edgewater said the company’s Blackwell allocation is at risk.

Abbvie closed down more than -12% after saying its two mid-stage trials of its investigative treatment for adults with schizophrenia missed their primary endpoints.

Celanese closed down more than -7% after BMO Capital Markets downgraded the stock to underperform from market perform with a price target of $76.

Newmont Corp closed down more than -6% to lead miners lower after the price of gold dropped more than -2% Monday to a 1-month low.

Monday.com closed down more than -15% after reporting an unexpected Q3 EPS loss of -24 cents versus expectations of a +1-cent gain.

Sapiens International NV closed down more than -26% after reporting Q3 adjusted revenue of $137.0 million, weaker than the consensus of $140.2 million.

Revvity closed down more than -1% after Nephron Research downgraded the stock to sell from hold with a price target of $105.

Earnings Reports (11/12/2024)

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On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policyhere.