Cigna Downgraded to Hold by Jefferies on Mounting 2027 Earnings Risks

Jefferies downgraded Cigna (NYSE: CI) to Hold from Buy on Tuesday, warning that a confluence of future challenges outweighs the stock's discounted valuation. The investment firm cut its price target on the health insurer to $307 from $336, citing significant earnings headwinds expected in 2027.

Headwinds Cloud Earnings Outlook

In a note to clients, Jefferies detailed several factors that could pressure Cigna's future profitability. The firm lowered its 2027 earnings estimate to $32.77 per share, approximately 1% below consensus, based on three primary concerns:

• Potential Divestitures: Uncertainty around the strategic review of Cigna's EviCore and health insurance exchange (HIX) businesses is a key risk. Jefferies estimates EviCore contributes $700 million to $1 billion in adjusted operating income, and a sale of both units could reduce 2027 operating income by roughly 10% versus current expectations.
• GLP-1 Drug Pressure: The firm anticipates that reduced employer coverage for popular GLP-1 weight-loss drugs will intensify. This could increase the negative earnings impact to about $126 million in 2027.
• PBM Scrutiny: Cigna's pharmacy benefit manager (PBM) business faces mounting regulatory and legislative pressure at the state level, which could cap margin expansion and create a long-term overhang for the business model.

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Valuation Discount Deemed Justified

Jefferies acknowledged that Cigna stock trades at a low valuation, at approximately 8.3 times consensus 2027 earnings estimates. However, the firm argued that this discount is warranted given the circumstances.

The note stated that weaker growth prospects, limited catalysts for multiple expansion, and ongoing execution risks as the company transitions to a rebate-free PBM model justify a more cautious stance. According to Jefferies, these headwinds outweigh the appeal of the stock's current price.