S&P Capital IQ Reiterates its BUY Rating on CIGNA

October 25 00:00 2011

NEW YORK, October 25 (RainbowNewsLine.com) – Analyst Phillip Seligman of S&P Capital IQ reiterates his BUY rating on the shares of CIGNA (NYSE: CI). The target price is set to $54.

Analyst Phillip Seligman, in a research note published yesterday, mentions that the company has announced its plan to acquire HealthSpring (NYSE: HS) for $3.8 billion in cash. Cigna plans to finance 20% of the transaction with new shares and rest with cash & debt. The company has said that the acquisition will be accretive to its EPS during the first 12 months, expecting the deal to close in 1H2012, the analyst says. The analyst believes that CIGNA will benefit significantly from the increasing Medicare business, HS’s physician engagement model, and revenue & cost synergies, if the deal is executed well. The 2011 EPS estimate and the target price are retained, while CIGNA has narrowed its 2011 EPS guidance range from $4.95-$5.25 to $5.05-$5.30.