DCF Studio

    CI · NYQ · Healthcare

    The Cigna Group

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 1131.79

    Market price

    USD 275.28

    Implied upside

    +311.1%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    AdjustedReported capital expenditure averages just 0.64% of revenue, which is too low to be the company's real investment - property trusts and similar structures invest through lines that are not reported as capex. Capex has been set to 1.00% of revenue so the forecast is not handed free growth. Override it if the reported figure is right.

    Value Per Share

    Perpetuity growth
    USD 1131.79+311.1%
    Exit multiple
    USD 794.36+188.6%
    Market price
    USD 275.28

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn9bn18bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 315.3bnUSD 363.1bnUSD 418.1bnUSD 481.5bnUSD 554.4bn+15.1%
    EBITUSD 11.3bnUSD 13.0bnUSD 14.9bnUSD 17.2bnUSD 19.8bn+15.1%
    NOPATUSD 9.1bnUSD 10.5bnUSD 12.1bnUSD 13.9bnUSD 16.0bn+15.1%
    Add depreciation & amortisationUSD 4.2bnUSD 4.8bnUSD 5.6bnUSD 6.4bnUSD 7.4bn+15.1%
    Less capital expenditureUSD -3.2bnUSD -3.6bnUSD -4.2bnUSD -4.8bnUSD -5.5bn+15.1%
    Less increase in working capitalUSD 333.2mUSD 383.7mUSD 441.8mUSD 508.7mUSD 585.8m-15.1%
    Free cashflow to firmUSD 10.5bnUSD 12.1bnUSD 13.9bnUSD 16.0bnUSD 18.4bn+15.1%
    Discount factor0.96770.90620.84850.79460.7441-
    Present valueUSD 10.1bnUSD 10.9bnUSD 11.8bnUSD 12.7bnUSD 13.7bn+7.8%
    Present Value Of The ForecastUSD 59.3bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.542Reported 0.317, pulled toward 1.0 (Blume)
    Cost of equity7.98%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 72.7bn69.8% of capital
    Total debtUSD 31.5bn30.2% of capital, book value as a proxy
    Tax rate19.2%Effective, capped at statutory
    WACC6.79%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 1131.79

    82% of EV

    Forecast FCFF, final year
    USD 18.4bn
    Capex at depreciation, working capital in reinvestment
    USD 21.4bn
    Less reinvestment at g/ROIC (29.8% of NOPAT)
    USD -6.4bn
    Capitalised
    USD 15.0bn
    ROIC (reported)
    8.4%
    Terminal value, undiscounted
    USD 359.5bn
    Terminal value, discounted
    USD 267.5bn
    Enterprise value
    USD 326.8bn
    Less net debt
    USD 22.8bn
    Equity value
    USD 304.0bn

    Exit at 8.7x EBITDA

    Value per shareUSD 794.36

    75% of EV

    Terminal value, undiscounted
    USD 237.7bn
    Terminal value, discounted
    USD 176.9bn
    Enterprise value
    USD 236.2bn
    Less net debt
    USD 22.8bn
    Equity value
    USD 213.3bn

    Spread between methods: 35%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    4.79%1785.121947.272178.532536.793169.69
    5.79%1344.991411.121496.231610.501773.06
    6.79%1071.441098.841131.791172.511224.52
    7.79%885.02894.44904.99917.04931.11
    8.79%756.05759.16762.27765.37768.48

    Outlined: this model. Green text: above today's price of 275.28. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year15.1%-11.7%-26.8pp
    EBIT margin3.6%0.3%-3.3pp
    Discount rate6.8%19.2%+12.4pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.