Trade of the Day: CI Stock Knocking on the Door of a Breakout

Advertisement

Cigna Corporation (CI)This health insurer and benefits manager operates in three segments: health care, supplemental benefits and disability, and life insurance.

S&P Capital IQ Equity Research currently rates CI stock a “Buy” with a 12-month target price of $188. Its analysts note the company is overhauling its cost structure for the better, and its diverse line of products is compelling. They also acknowledge the company’s unwavering pricing policies may have led to falling enrollments, though that discipline offers more upside than downside for patient investors.

It’s not a name that’s been well-liked by the market since the middle of last year. In addition to the pullback in CI stock, most managed care and benefits companies like Anthem Inc (ANTM) and Aetna Inc (AET) saw their shares peel back from impressive highs as it became clear the positive impact of the Affordable Care Act was likely being outpaced by its adverse fiscal impact. While some of these names began merger talks, the political and social uproar against even less competition in that space left these companies between a rock and a hard place.

The dust is settling now, however, and it looks as if the bears overreacted. Cigna may get a little more ACA-related reprieve than the market has been guessing, and the chart suggests traders are starting to figure that out.

CI stock has resisted the marketwide bearishness with the help of horizontal support at $134.70. Though that floor didn’t serve as a springboard to catapult shares back above their 200-day moving average this week, the catalytic move remains a distinct possibility. The ultimate bullish pivot, however, remains the Nov. 20 gap. The stock logged a higher high and higher low in the meantime.

Buy CI stock on a move above $141 with a buy under price of $142 in anticipation of a move back to June’s peak around $170. If such a rally materializes, it shouldn’t take more than a few weeks to reach the price objective and would result in a gain of about 20%.

chart key 300x84 Trade of the Day: SE Stock Showing Signs of a Bottom

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2016/01/cigna-corporation-ci-stock-trade-of-the-day/.

©2024 InvestorPlace Media, LLC