Overview
Raymond James has downgraded its view of Cigna Group to Outperform from Strong Buy and lowered the firm’s price target to $320 from $350. The brokerage underscored that while Cigna’s current valuation appears undemanding, the company lacks immediate catalysts to drive faster appreciation as growth moderates and its pharmacy benefit management - PBM - operations contend with persistent headwinds.
PBM pressures and investment drag
The brokerage said Cigna operates in a mature segment with slower growth relative to other names it covers. Raymond James expects the insurer will need ongoing investments to manage a PBM transition, and that these investments, together with limited customer growth, will act as a drag on earnings momentum over the medium term. The report noted that Cigna’s specialty pharmacy business is partially offsetting some weakness, but that overall the PBM segment is running slightly below earlier expectations.
Valuation and medium-term outlook
Despite the downgrade, Raymond James retained a constructive stance on the equity, pointing to an attractive valuation. The firm observed that shares trade at roughly 8.3 times its 2027 earnings estimate and that Cigna offers an estimated 13% free cash flow yield. Raymond James projects earnings growth will accelerate to around 10% in 2027 as PBM pressures ease, the stop-loss business becomes fully repriced, and share repurchases increase.
Recent results and guidance
Raymond James highlighted that Cigna reported a solid second quarter, with adjusted earnings per share of $7.78, beating consensus by $0.18. Both Cigna Healthcare and Evernorth produced stronger-than-expected performances. Management also delivered a medical loss ratio of 84.5%, which came in better than forecasts, and modestly raised 2026 adjusted EPS guidance to at least $30.45 from $30.35 while keeping its medical loss ratio outlook intact.
Product-volume trends and modeling
The brokerage flagged expectations for a slowdown in GLP-1 prescription volumes in the second half of 2026 as commercial coverage declines. It expects rising biosimilar and generic drug volumes in specialty pharmacy to partly offset that pressure. Raymond James continues to model adjusted EPS of $30.50 for 2026, $33.50 for 2027 and $37.00 for 2028.
Key metrics and figures cited in Raymond James' assessment remain unchanged: price target cut to $320 from $350; Q2 adjusted EPS $7.78, beating by $0.18; medical loss ratio 84.5%; 2026 guidance raised to at least $30.45 from $30.35; valuation at approximately 8.3 times 2027 earnings; estimated 13% free cash flow yield; modeled EPS of $30.50 (2026), $33.50 (2027) and $37.00 (2028).