Cantor Fitzgerald analysts reiterated an Overweight rating on The Cigna Group (NYSE:CI) with a target price of $372, ahead of the company's 2024 Investor Day on Thursday. The analysts' optimism towards CIGNA is partly due to potential earnings growth in 2025 and 2026 from Evernorth. The upcoming event is expected to shed light on this, acting as a positive catalyst.

The analysts believe that the market may be underestimating the earnings boost from the $30 billion Centene contract for Evernorth. They anticipate a significant earnings increase from this contract in 2025 compared to 2024, alongside core earnings growth within the company's long-term guidance of 5-7%. This could result in 2025 adjusted operating income ranging between $8 billion and $8.6 billion, surpassing the consensus estimate of $5.7 billion.

The analysts’ estimates have been adjusted to the lower end of this range, at $8 billion. The Centene contract is expected to be earnings-neutral in 2024 but achieve target margins by 2025. The analysts suggest that target margins for large accounts could be below the company's average, leading to an estimated $600 million to $1.05 billion in adjusted operating income from the contract alone. The analysts suggest that there might be room for further margin expansion across CIGNA's core book in the following years, offering additional upside to their projections.