Cigna (CI) Could See Slight Bottom-Line Impact in FY16 Amid New Medicare Sanctions - Leerink

Leerink reaffirms Cigna (NYSE: CI) at Outperform with a price target of $175 after the company disclosed sanctions on Medicare Advantage (MA) and Part D plans to new customers this morning.

The firm commented: We estimate little to no top-line impact in 2016 as the open enrollment season is completed, though there could be modest bottom-line impact for 2016 (at about 2% of earnings). Such sanctions have had precedent with peers and take a year or so to resolve, which could keep Cigna out of the 2017 open enrollment season and impact earnings growth negatively.

We estimate about 10%-12% of CI's earnings currently come from MA while Part D earnings contribution is de minimis. We expect no impact on the likelihood of the ANTM (OP) deal from an intent perspective and don't expect this to impact anti-trust scrutiny to any meaningful degree. If CI is not in the game for 2017, it could help UNH (OP), AET (OP) and HUM (OP) on MA and Part D growth, though all companies are likely on high alert as far as regulatory compliance with CMS is concerned.

For an analyst ratings summary and ratings history on CIGNA click here. For more ratings news on CIGNA click here.

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