Why Cigna Corporation Shares Crashed

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Cigna Corporation (NYSE: CI  ) have lost 10% of their value today after the health insurer disappointed Wall Street with its fourth-quarter earnings report.

So what: Cigna's fourth-quarter revenue came in at $8.15 billion, a 7% year-over-year improvement and better than the $8.05 billion Wall Street consensus. However, Cigna's adjusted earnings of $1.39 per share were worse than the $1.49 in EPS analysts had expected (GAAP EPS was $1.29), and the company's guidance for 2014 now looks worse: While analysts had modeled Cigna's full-year EPS at $7.32, the company offered a range of $6.80 to $7.20 per share.

Now what: Obamacare's impact has yet to be fully felt on the health insurance industry's bottom line, but if this report is any indication, that impact won't be a good one. Shares of other insurers are also feeling the pain today as investors come to grips with the likelihood of higher medical costs -- Cigna highlighted higher-than-expected costs in its private Medicare business as a reason for the profit drag.

Today's drop shouldn't scare long-term investors away, but there might be better insurers out there for your investment dollars. Don't jump in before you assess Cigna's value relative to its peers.

Want more news and updates? Add Cigna to your Watchlist now.

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  • Report this Comment On February 12, 2014, at 5:34 PM, gamma wrote:

    It's true that CI shs have "crashed" over the past 2 days, but over the past year they have been the very picture of a rocket ship, doubling with extreme gusto and essentially no pullbacks. A powerful stock, there should be no question.

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Alex Planes

Alex Planes specializes in the deep analysis of tech, energy, and retail companies, with a particular focus on the ways new or proposed technologies can (and will) shape the future. He is also a dedicated student of financial and business history, often drawing on major events from the past to help readers better understand what's happening today and what might happen tomorrow.

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9/3/2015 4:01 PM
CI $141.62 Up +2.28 +1.64%
Cigna Corporation CAPS Rating: ****