(By Salman - iStockAnalyst Writer)
CIGNA Corporation provides health care and related benefits in the United States and internationally. It operates in five segments: Health Care, Disability and Life, International, Run-off Reinsurance, and Other Operations.
Shares of the company came under pressure on Wednesday after President Barack Obama reiterated his support for a government-run plan that would compete with private insurance. The Obama administration and some prominent Democratic lawmakers have been pushing hard for a public insurance option that would offer cheaper insurance than the managed-care companies. On the other hand, Republicans are strongly opposed to the idea.
Earlier, Cigna got a big boost after Journal published today, Rahm Emanuel, the White House chief of staff, suggested that the administration is open to negotiations on a government-sponsored insurance plan – i.e "public option."
There is no doubt that Cigna's business will be hurt if health insurance reform bill ends up including the public option. President Barack Obama wants to sign a health-care reform bill by October.
The company is already feeling heat due to rising unemployment. Late in April, Cigna reported quarterly earnings that missed analyst estimates. First quarter net income totaled $208 million, or 76 cents a share, up from $58 million, or 20 cents a share, in the same quarter of 2008. On an adjusted basis, income from operations was $188 million, or 69 cents a share, down sharply from $265 million, or 93 cents a share, in the first quarter of last year.Revenue climbed to $4.8 billion $4.6 billion. Consensus estimates were for the Philadelphia-based firm to earn 90 cents a share. Cigna's total medical enrollment fell 3 percent to 11.4 million from the end of 2008. Its fully insured business lost 101,000 members.
Looking ahead, Cigna reduced its adjusted operating income estimate for the year to $3.70 to $3.90 per share, down from the $3.95 to $4.25 per share it estimated in February.
CIGNA Corporation will release its second quarter 2009 financial results on Thursday, July 30, 2009.
Looking at the balance sheet the company currently has $1.49 billion in cash and cash equivalents and $2.48 billion in debt. The stock currently trades at a forward P/E (fye 31-Dec-10) of 5.82 and PEG ratio of 0.67.
Of the eleven Wall Street analysts who cover the stock, six rate it a Strong Buy while five tag it a Hold.
Abbott Laboratories manufactures and sells health care products worldwide.
