Cigna (CI): One Stock to Monitor Closely
NEW YORK (TheStreet) --The price chart and technical indicators for CIGNA Corp. (CI) - Get Report have been deteriorating and could soon take a turn for the worse.
In this chart of CI, above, we can see a possible "blow off" or "climax peak" in June. Prices shot up $30 in a short span of time while volume also spiked. After this run up, prices of CI have been grinding lower with a loss of $40. The 50-day and 200-day moving averages are flat and the 50-day could soon cross below the longer 200-day average, generating a sell signal. The On-Balance-Volume (OBV) line peaked with prices in late June. The Moving Average Convergence Divergence (MACD) oscillator has been below the zero line since early August.
This longer look at CI reinforces our negative view. Notice the volume spike as prices accelerated to a peak. The OBV line is flat while the MACD oscillator is in a tailspin. Prices look poised to break down, but we are not sure what price point will be the trigger; a close below $128, $127 or $125? If long, we suggest you closely monitor your position.
TheStreet Ratings team rates CIGNA CORP as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
We rate CIGNA CORP (CI) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity and good cash flow from operations. We feel its strengths outweigh the fact that the company shows low profit margins.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Health Care Providers & Services industry average. The net income increased by 2.4% when compared to the same quarter one year prior, going from $534.00 million to $547.00 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 10.1%. Since the same quarter one year prior, revenues slightly increased by 7.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The current debt-to-equity ratio, 0.44, is low and is below the industry average, implying that there has been successful management of debt levels.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Health Care Providers & Services industry and the overall market, CIGNA CORP's return on equity exceeds that of both the industry average and the S&P 500.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 31.05% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, CI should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- You can view the full analysis from the report here: CI
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.