Cigna: Squashes Humana Deal Rumors by Announcing Other Capital Allocation Priorities

After merger rumors surrounded narrow-moat Cigna and Humana in recent weeks, Cigna announced other capital allocation priorities that look more appropriate to us, especially given antitrust concerns that likely would have surrounded the pharmacy benefit management part of the rumored combination. We are keeping our fair value estimates for both organizations intact. Following their decline since deal rumors were highlighted a couple of weeks ago, Cigna's shares look especially attractive relative to our fair value estimate.