Piper Sandler has initiated coverage on Cigna Corporation (NYSE:CI), a diversified managed care and healthcare delivery organization specializing in commercial insurance markets and pharmacy services.

The analyst writes, "We believe Cigna has a unique and defensible leadership position in the fast-growing specialty pharmacy market which, together with the company's insurance segment and core PBM business, should support LT-adjusted EPS growth at a 10-14% CAGR."

Related: Cigna Crushes Q1 Estimates: Revenue Soars With Evernorth's Explosive Growth.

The company's Cigna Healthcare and Evernorth Health Services businesses complement one another and empower Cigna to continue delivering premium adjusted EPS growth against the LT target of 10-14% per year, the Piper analyst writes.

Cigna grew adjusted EPS at a 13%+ CAGR from 2013-2023, and the company is expected to maintain its track record of consistent execution against industry-leading earnings growth targets over the next decade.

Piper adds, "We believe CI will focus on organic earnings growth until we know the outcome of the 2024 presidential election and get a better understanding of the antitrust/ MA regime for the next 4 years."

Piper initiates with an Overweight rating and a price target of $400.

A 12.5x multiple is appropriate as it assigns an in-line/slight-premium multiple to the comp group, which Piper writes is justified by Cigna's above-average EPS CAGR.

The analyst also writes that selling the medicare advantage business to HCSC will be a positive catalyst for Cigna when it closes in the first quarter of 2025.

Piper says Cigna's strong position in the $400 billion specialty market is encouraging. While many are tackling the drug pricing crisis, Cigna is at the forefront.

Specialty services drive growth for Evernorth, which is supported by Cigna's transparent PBM business. We are confident in Evernorth's 5-8% long-term growth forecast.

Price Action: CI shares are down 0.41% at $337.41 at the last check on Wednesday.

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