By Sam Boughedda
Cigna Corp. (NYSE:CI) reported earnings for its latest quarter before the opening bell Friday, topping earnings but missing revenue consensus expectations.
While the earnings beat was enough to push the company's share price higher at the start of the session, the revenue miss and conservative guidance have weighed on Cigna shares, which are currently down 0.65% on the day.
The managed healthcare and insurance company reported earnings of $4.96 per share on revenue of $45.75 billion, beating consensus expectations of $4.87 per share in earnings on revenue of $45.88B.
Looking forward, Cigna sees FY2023 earnings of at least $24.60 per share, below the consensus of $24.84.
"We are carrying great momentum into 2023," said David Cordani, chairman and chief executive officer of Cigna.
Following the report, Morgan Stanley analysts told investors in a research note that the company's fourth quarter was a "clean beat," but its initial 2023 EPS guidance was conservative.
The analysts, who have an Overweight rating and a $365 price target on the stock, said: "Despite the latest respectable 4Q EPS upside on lower costs and tax, focus will inevitably be on 2023 where its initial guidance floor may be perceived as overly conservative. However, we view this as an achievable bar with focus also increasingly on 2024 earnings power."
Wolfe Research analysts said in a note to clients that Cigna's EPS beat was due to strong MLR.
"Adj. EPS of $4.96, above WR/Cons of $4.90/$4.86 with MLR of 84.0% beating WR/Cons of 84.4%/84.3%. Evernorth OI of $1.725B moderately missed WR's $1.76B," wrote the analysts.
"CI introduced full FY23 EPS guidance of at least $24.60 vs. Wolfe/consensus $24.87/ $24.79, representing growth of ~5.7% y/y – with y/y pressure from previously disclosed CNC PBM contract implementation expected to be ~$200M (~$.50) headwind and recall CI convention of backing out PYD," they added. "Importantly, the guide embeds solid Evernorth OI growth of 4.5% which ex. CNC drag moves to ~7.7%, above the co.'s LT target range of 5-7% with CI HC growth of ~8% (higher ex PYD) vs. 8-10% target."