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Cigna Corporation (CI) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Cigna Corporation (CI)

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Intrinsic Value (DCF)

Current$271.81
→
Intrinsic$171.60
-37%
$86.89$171.60$340.21
Market implies 18% growth for 5 years
Current price reflects execution expectations above 10% growth — not unreasonable for quality businesses.
At $272, the market prices in continued high-teens cash flow growth (18%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $87 → Bull $340. Current price implies expectations above the base case, closer to bull expectations.
Discount ↓Growth →6%8%10%12%
8%$230$259$290$323
10%$132$151$172$194
12%$80$94$109$125
14%$48$59$71$83

Bull Case

  • Bull case ($340) offers 25% upside at 12% growth, 8% discount
  • Conservative 10% growth assumption is achievable based on track record

Bear Case

  • Bear case ($87) implies 68% downside at 8% growth, 12% discount
  • Price reflects 18% growth expectations vs 10% historical — high bar to clear
  • Trading 37% above base case — execution must exceed assumptions to justify
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5-Year Net Income Projection

Year 1$3.78B
Year 2$4.15B
Year 3$4.57B
Year 4$5.02B
Year 5$5.53B
Terminal$87.57B

📐 Model Inputs

Growth Rate10.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate9.5%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Net Income$3.43BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. Uses Net Income (FCF not meaningful for insurers). See FAQ below for full methodology.

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Frequently Asked Questions

Is CI stock undervalued or overvalued?
🔴 OVERVALUED

CI trades at $271.81 vs. our DCF-derived intrinsic value of $171.60, implying -40% downside. Using a 9.5% WACC and 10.0% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($280.73) suggests limited upside.

What is CI's intrinsic value?

Using a 5-year DCF model: Base FCF of $3.43B, projected at 10.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 9.5% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $24.42B net debt and dividing by 0.28B shares: Bear $94.08 | Base $171.60 | Bull $280.73. Current price $271.81 implies -40% to base case.

How is CI's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 10.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=9.5%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($73.02B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 21.3x.