Cigna CorporationCINYSE

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DCF Valuation

⚠️Model Warnings

•Terminal value represents 89% of enterprise value. Valuation highly sensitive to long-term assumptions.

DCF Valuation Summary

Strong Buy

Fair Value: $5,000.57 per share(market-calibrated)

+1661.2%

Upside to Fair Value

Current

$283.93

Pure Model

$5,784.64

Fair Value

$5,000.57

Bull Case

$7,562.80

Bear Case

$4,559.87

Market Reality Check

Model Terminal Growth

3.00%

Market-Implied Growth

0.50%

Calibrated Growth

2.13%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $5,784.64.

What's Driving This Ratingfor CI

✓

CapEx already efficient

CapEx at 0.48% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.

↑

Margin expansion modeled

Current EBIT margin is 4.25% — below the sector mature average of 20.00%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $77.4B (14.84% margin).

→

Moderate revenue growth

Analyst consensus projects 3.61% revenue growth, fading to 3.00% by Year 10. Revenue reaches $521.4B (vs $275.0B today).

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 250bps below the model's 3.00%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 78.59% indicates efficient cash generation. FCF reaches $65.1B by Year 10 (12.49% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.28

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)5.77%

Cost of Debt

Pre-tax Cost of Debt4.26%

Tax Rate17.71%

After-tax Cost of Debt3.50%

Equity Weight (E/V)70.59%

Debt Weight (D/V)29.41%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (70.59% × 5.77%) + (29.41% × 3.50%)

= 5.50%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$284.9B	$319.8B	$389.8B	$457.0B	$521.4B
EBIT	$12.1B	$13.6B	$16.6B	$45.3B	$77.4B
Tax	$2.1B	$2.4B	$2.9B	$8.0B	$13.7B
NOPAT	$10.0B	$11.2B	$13.6B	$37.3B	$63.7B
+ Depreciation	$3.0B	$3.4B	$4.1B	$4.8B	$5.5B
- Capex	$1.4B	$1.5B	$1.9B	$2.2B	$2.5B
- Δ NWC	$992M	$1.8B	$3.7B	$3.2B	$1.5B
Free Cash Flow	$10.6B	$11.2B	$12.1B	$36.7B	$65.1B
Discount Factor	0.948	0.852	0.765	0.687	0.585
Present Value	$10.0B	$9.5B	$9.3B	$25.2B	$38.1B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$65.1B

Terminal Growth Rate3.00%

WACC5.50%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$2.7T

PV of Terminal Value$1.6T

Exit Multiple Method

Year 10 EBITDA$82.9B

Exit Multiple (EV/EBITDA)24.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$2.0T

PV of Terminal Value$1.2T

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$194.9B

PV of Terminal Value$1.6T

Enterprise Value$1.8T

(-) Net Debt$23.8B

Equity Value$1.7T

Shares Outstanding266M

Price per Share$6,548.57

Exit Multiple Method

PV of Projected FCFs$194.9B

PV of Terminal Value$1.2T

Enterprise Value$1.4T

(-) Net Debt$23.8B

Equity Value$1.3T

Shares Outstanding266M

Price per Share$5,020.70

Pure Model Fair Value

$5,784.64

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	2.00%	2.50%	3.00%	3.50%	4.00%
3.50%	$7,464.89	$7,141.59	$6,833.80	$6,540.70	$6,261.53
4.50%	$6,317.86	$7,141.59	$6,833.80	$6,540.70	$6,261.53
5.50%	$4,920.56	$5,280.59	$5,784.64	$6,540.70	$6,261.53
6.50%	$4,066.34	$4,259.26	$4,507.30	$4,838.02	$5,301.04
7.50%	$3,468.94	$3,585.03	$3,726.92	$3,904.27	$4,132.31

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$4,559.87

1506.0% vs current

• -25% vs analyst consensus
• Terminal growth: 2.5%
• Beta: 0.35

Base Case

$5,784.64

1937.3% vs current

• Analyst consensus
• Terminal growth: 3.0%
• Beta: 0.28

Bull Case

$7,562.80

2563.6% vs current

• +25% vs analyst consensus
• Terminal growth: 3.5%
• Beta: 0.30

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Healthcare Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth3.61%

Year 3 Revenue Growth5.97%

Year 5 Revenue Growth10.53%

Year 7 Revenue Growth7.52%

Year 10 Revenue Growth3.00%

Terminal Growth Rate3.00%

Margin & Efficiency

Current EBIT Margin4.25%

Terminal EBIT Margin20.00%

Tax Rate17.71%

Historical Capex / Rev0.48%

NWC / Revenue10.00%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 24x EV/EBITDA (Healthcare sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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