Cigna Downgraded by Raymond James on Muted Near-Term Outlook

Raymond James has downgraded shares of Cigna Group (NYSE: CI) to Outperform from a previous Strong Buy rating, citing a lack of significant near-term catalysts for the stock. The firm also reduced its price target on the health insurer to $320 from $350 per share.

Rationale for the Downgrade

Analysts at the brokerage pointed to moderating growth prospects and persistent headwinds within Cigna's pharmacy benefit management (PBM) business as key reasons for the change. According to their note, Cigna operates in a mature market with slower growth compared to other companies in its sector.

Raymond James expects that ongoing investments in the PBM transition, coupled with limited customer growth, will likely pressure earnings momentum over the medium term. The firm noted that while Cigna's specialty pharmacy business is providing some offset, the broader PBM segment is tracking slightly below its prior expectations.

Valuation Remains Attractive

Despite the downgrade, Raymond James maintained a broadly positive view on Cigna, highlighting what it called an "undemanding valuation." The firm noted the stock trades at approximately 8.3 times its 2027 earnings estimate and offers an estimated 13% free cash flow yield.

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The brokerage anticipates a re-acceleration in Cigna's earnings growth to around 10% in 2027. This forecast is based on several factors:

• An expected easing of PBM headwinds.
• The full repricing of its stop-loss business.
• An increase in share repurchase activity.

Recent Performance and Outlook

Cigna recently delivered a solid second-quarter performance, reporting an adjusted earnings per share (EPS) of $7.78, which surpassed the consensus estimate by $0.18. The company's medical loss ratio of 84.5% also came in better than anticipated.

Following the results, Cigna's management modestly raised its full-year 2026 adjusted EPS guidance to at least $30.45, up from a previous $30.35. Raymond James also observed that while GLP-1 prescription volumes are expected to slow in the second half of 2026, this may be partly offset by rising volumes of biosimilar and generic drugs.