Stifel Sees A Win-Win For Cigna, Initiates At Buy

Stifel analysts, Thomas Carroll and Mark Kelly, have initiated coverage on Cigna Corporation

shares with a Buy rating. Based on the deal value of Anthem, the brokerage has kept its price objective of $169.0 on the company's stock. Following the news, the stock traded 2.45 percent higher on Tuesday. The two analysts also cautioned that the shares should trade around $155 level if pending deal with Anthem does not get through for want of regulatory approvals. The analysts still felt that it offered more than 22 percent upside potentials from the current levels. The two analysts said in their research note to their clients that "Cigna has made significant strides in better positioning itself for a post-Affordable Care Act (ACA) world. We expect the company to continue adding strategic components that improve its competitive position, either as a stand-alone organization or as a component of ANTM." Referring the Anthem deal, Stifel thinks that the agreement was not clear. In its view, though the deal might finally be completed, the brokerage sees a possible way of failure also. The two analysts believe there was no change in its argument for the deal to gain regulatory approval after summer 2015. The brokerage expects Cigna to continue tactical components addition to enhance its position competitively. This could be through the stand-alone or as Anthem component. The analysts think that shares of the company looked attractive since it trade towards the bottom of valuations and MCOL. However, the brokerage does not see the shares to have material downside risks in case its deal with Anthem failed to pass through for want of regulatory approvals. Shares of the company traded 2.45 percent up on Tuesday while writing this article.