Why Cigna Stock's Rally Could Have Legs

CI has added over 15% this year

facebook twitter linkedin


This commentary first appeared on Forbes Great Speculations, where Schaeffer's Investment Research is a regular contributor.

Compared to much of the market, healthcare stock Cigna (CI) has held up fairly well. The equity boasts a 15.2% year-to-date lead, and has even managed to cling to a positive year-over-year return. While the security has taken a breather since touching a fresh annual high of $273.57 during last Tuesday’s session, there’s reason to believe a trendline sitting just below could put additional wind in CI’s sails this June.

Cigna stock just pulled back within one standard deviation of its 40-day moving average after a lengthy period above the trendline. According to a study from Schaeffer’s Senior Quantitative Analyst Rocky White, CI has seen six similar occurrences over the past three years. One month after 83% of these occurrences, the shares were higher, averaging a 3.7% return during this time period. From its current perch, a similar move could put CI just below the $271 mark and closer to Tuesday’s peak.

ci jun 8

Plus, there’s still room for upgrades for Cigna stock. Of the 16 in coverage, five still say “hold.” Meanwhile, the 12-month consensus price target of $291.17 is a 10.3% premium to current levels.

An unwinding of bearishness among short-term options traders could also provide tailwinds. Cigna stock’s Schaeffer’s put/call open interest ratio (SOIR) of 1.12 sits higher than 77% of readings from the past year, indicating these traders are incredibly put-biased right now.

 

Now is the time to join our thriving community of Event Traders who consistently profit from every earnings season. With this discounted subscription opportunity, you'll stay ahead of the curve and seize opportunities others miss. Do not let Q3 earnings season pass you by – subscribe now and supercharge your portfolio with expert insights that turn market reactions into profit-generating opportunities!! Don't waste another second... join us right now before the next trade targeting +200% is released!