Why Cigna Stock Will Hit New Highs by March

Shares of the Cigna group

Key points

  • Stocks have rallied strongly after falling before Christmas, with last week’s results the latest tailwind.
  • Analysts continue to upgrade their ratings and raise their price target on Cigna stock.
  • All things being equal, Cigna will hit new highs in the coming weeks.
  • 5 stocks we like most from Cigna Group

From the Cigna Group NYSE: CI The 35% rally that began last summer has just hit a new high gear. While investors may have been spooked by the 20% drop from November to December, all the damage has since been repaired and then some. The healthcare and managed insurance giant has bounced back with the best since the start of the year, and with the S&P 500 already hitting new highs, Cigna is about to do the same.

The latest move began just last week, when, ahead of the company’s fourth-quarter earnings, the Deutsche Bank team upgraded its rating on Cigna stock. Having previously held it on hold, they moved it to buy following the company’s decision to sell its Medicare business for $3.7 billion.

Bullish updates

Deutsche has more confidence in Cigna’s ability to hit its 2025 EPS estimates following the sale, as the underperforming Medicare unit was seen as a burden around the broader business’s neck. Improving the stock just on that news, when earnings were due the next day, was a bold step to take, but one that was well justified shortly thereafter.

The next day Cigna beat analysts’ expectations in both revenue and EPS and showed solid growth virtually across the board. And looking beyond last quarter’s strong performance, management is extremely optimistic about next year. Their forward guidance was ahead of consensus, always a good thing, and they are so confident when it comes to achieving this goal that Cigna’s leadership even increased the quarterly dividend.

This is a move not to be taken lightly, as the effect on a stock’s price from a dividend cut can be vicious, so a company only increases dividends when it knows it can sustain them indefinitely. For investors, it’s one of the most bullish signals around, and it’s no surprise that Cigna stock reacted this way. As of the close of Tuesday’s session, they were just 4% above their 2022 all-time high, and you have to think they’re good value to do business here in a short time.

Stocks as a whole are having some of their best weeks in years as risk appetite continues to grow alongside expectations of an end to interest rate hikes. While any stock without major headwinds will do well in such an environment, those already operating at a high level, like Cigna, will do even better.

Great expectations

Using MarketBeat’s research tools, we can see that expectations are high across the board for Cigna to extend its current rally to new highs in the near term. Just this week, the teams at Mizuho, ​​Cantor Fitzgerald, and RBC raised their ratings on Cigna stock, with price targets extending as high as $372. From where shares closed on Tuesday, that indicates further upside of more than 10%, and if Cigna shares reach that in the coming weeks, they would be well above the 2022 high of $340.

Technically, the setup remains bullish but not excessively. With the rally in recent weeks taking so many stocks to new highs, many are already in overbought territory and getting frothy. Not so for Cigna, whose relative strength index (RSI) is at a warm 70, suggesting that while momentum is still mostly bullish, there is also much more room to run from current levels.

Our suggestion? Get excited about it and get excited fast. In many ways, Cigna has been on a multi-decade rally, almost never hitting lower lows during downturns. With her stock on the verge of breaking into blue sky territory, it doesn’t look like things will change anytime soon.

Before you consider Cigna Group, you’ll want to hear this.

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While Cigna Group currently has a “Moderate Buy” rating among analysts, top analysts believe these five stocks are better buys.

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