Cigna: Do Not Miss The Moment
Summary
- The US managed care industry has strong tailwinds due to population growth, aging, and new care developments.
- The biggest risk for the industry is the introduction of the single-payer system with an estimated probability of 1-2% per election cycle.
- Cigna is currently trading significantly below its historical multiples and rather cheap on an absolute basis.
- Cigna uses its strong free cash flow primarily for buybacks and shareholders benefit from periods of stock weakness.
- The current management is effective and aligned. Since 2009 when it was installed, the stock has grown at about 19% CAGR.
Analyst’s Disclosure:I/we have a beneficial long position in the shares of CI, UNH either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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