Cigna (CI) dropped 10% and Express Scripts (ESRX) jumped 11% in early Thursday morning trade as news of a takeover hit the wires.
The divergent price action was driven by Cigna’s plan to purchase ESRX for $67 billion in cash and stock. Cigna will also assume $15 billion in ESRX debt. If executed, Cigna shareholders will own 64% of the combined firm, and the merger will lead to expanded offerings and consolidated costs.
Cigna Indulges on Express Scripts, Cycles Suggest It will Continue to Pay
So where does this leave Cigna (CI) and Express Scripts (ESRX) investors now?
Before the deal, our analysis was that ESRX faced considerable risk. Looking at its market cycles, our outlook projected down to $70 for the near-term. So this news is more than welcome for shareholders.
The cycles are designated by the black semicircles at the bottom of the chart.
Express Scripts (ESRX) Stock Chart with Weekly Bars
Our analysis of Cigna also suggested substantial risk, as the declining phase of its current cycle completes. Our cycle forecast for Cigna stock (CI) is for a continued drop to $170 in the near term. So CI’s stock price is tracking well with our forecast.
Cigna (CI) Stock Chart with Weekly Bars
Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
This article was updated at 12:34 pm eastern to reflect the proper symbol for Cigna stock – CI (not C).