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Ahead of the Bell: Cigna impresses at investor day

Cigna is poised to grow its international and commercial health coverage, and the fundamental parts of the health insurer's business are becoming stronger, according to BMO Capital.

Analyst Dave Shove raised his 12-month price target on the stock to $65 from $60 after the Bloomfield, Conn., company met with analysts Friday at its annual investor day presentation.

Cigna has a broader product portfolio than some of its competitors. It operates health care, group disability and life segments in the United States. The insurer also has an international segment that sells individual insurance in several countries and operates an expatriate business that covers people living outside their home countries.

Much of the insurer's domestic health coverage involves policies it administers for employers who pay the medical bills instead of coverage where Cigna actually provides the insurance. Shove said this business will continue to be a "core strength" for Cigna. He also said in a research note the company's international business holds growth potential, and its operating expenses are falling.

Cigna Corp. forecast 2013 adjusted earnings of between $5.80 and $6.25 per share.

That fell below average analyst expectations for 2013 earnings of $6.33 per share, according to FactSet.

The company's forecast was more conservative than most analysts expected, Goldman Sachs analyst Matthew Borsch said in a research note. Borsch lowered his 12-month price target on the stock by $2 to $56.

The forecast fell below Jason Gurda's estimate of $6.30 per share, but the Leerink Swann analyst said Cigna's total doesn't count the potential for share repurchases to boost earnings per share.

"We came away (from Friday's presentation) increasingly confident in the company's diversified growth drivers and ability to successfully navigate the industry changes that are scheduled to occur over the next couple years," he wrote.

The health care overhaul, which aims to cover millions of uninsured people, will bring several changes the U.S. insurance market in the next few years. Many of the changes begin in 2014, when the state-federal Medicaid program expands to cover more people, and some taxpayers will start receiving credits to help them buy insurance on online marketplaces called exchanges.

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