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Cigna (CI) Signs $3.5B Accelerated Share Buyback Agreements

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Cigna Corporation CI recently announced that the company will buy back $3.5 billion worth of its common shares through multiple accelerated stock repurchase (“ASR”) agreements. The ASR agreements are part of the company’s existing buyback program that had about $8.8 billion in funds left as of Jun 14, 2022.

The ASR buyback program represented around 4.4% of CI’s market capitalization (around $78.8 billion) on Jun 16, at an adjusted share closing price of $248.30. It signed the agreements with Mizuho Markets Americas LLC and investment management company Morgan Stanley & Co. LLC, a subsidiary of Morgan Stanley MS.

Per the deal, Cigna will receive an initial delivery of stocks, representing 80% of the total ASR agreements on Jul 6, based on the Jul 1 closing price. The final settlement is scheduled for the fourth quarter of this year. Overall, CI intends to buy back at least $7 billion worth of its stocks this year alone.

Cigna has a strong shareholder value-boosting program in place. Last year, the company deployed more than $9 billion to its shareholders through share repurchases and dividend payments. In 2022, Cigna anticipates deploying total capital to the tune of $12 billion. In February 2022, Cigna increased its dividend by 12%.

Its steady cash flow generating ability supports the shareholder value-boosting efforts. In the trailing 12-month period, Cigna’s free cash flow generation jumped 14.8% year over year to $6.9 billion. Management expects 2022 medical customers to grow by a minimum of 725,000, which indicates an upside from the prior projection of “at least 575,000” growth. This growth momentum will likely support the company’s capital deployment goals.

Price Performance

Shares of Cigna have increased 4.9% in the past year against the 17.3% fall of the industry it belongs to.

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Zacks Rank and Key Picks

Cigna currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the medical space are Select Medical Holdings Corporation SEM and Progyny, Inc. PGNY, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Select Medical’s earnings is currently pegged at $2.19 per share. SEM has witnessed one upward estimate revision in the past 60 days against none in the opposite direction.

Select Medical’s earnings beat estimates in each of the last four quarters, the average being 42%.

The Zacks Consensus Estimate for Progyny’s 2022 bottom line has improved 4.5 times in the past 60 days. PGNY has witnessed three upward estimate revisions during the same time against none in the opposite direction.

Progyny’s earnings beat estimates in each of the last four quarters, the average being 169.7%.


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