UnitedHealth vs. Cigna: Which Insurer to Buy Amid Sector Turmoil?

UnitedHealth Group Incorporated UNH and The Cigna Group CI are two leading players in U.S. managed care insurance, offering health plans to employers, individuals and healthcare providers. In today’s healthcare environment, marked by surging medical costs, policy uncertainty and pricing pressure across Medicare Advantage and Medicaid, investors face mounting concerns over insurer profitability and guidance credibility.

Major carriers, such as UnitedHealth and Centene Corporation CNC, have already withdrawn 2025 forecasts amid escalating costs, while investors are growing worried about government-backed business lines. Cigna, by contrast, maintains a more commercial-heavy profile and has avoided the worst of the sector turbulence.

Let's dive deeply into their fundamentals and execution to determine which stock looks more resilient and promising amid the current disruption.

The Case for UnitedHealth

UnitedHealth remains the behemoth of managed care, built on its healthcare services arm, Optum and its massive Medicare Advantage and commercial insurance footprint. However, the company is increasingly under pressure. Medical loss ratios have surged beyond expectations as utilization outpaces pricing allowances, while regulatory headwinds, including DOJ inquiries into billing practices and Medicare Advantage risk score revisions, have clouded near-term prospects.

UnitedHealth withdrew its earnings outlook in May after acknowledging unexpected costs tied to higher-than-anticipated utilization in government programs. It missed earnings and revenue estimates in the first quarter of 2025. CEO Andrew Witty also stepped down unexpectedly, and the former longtime executive Stephen Hemsley returned to the helm. It was recently dropped from several Russell growth-style indices, including the Russell Top 200 Growth, Russell 1000 Growth and Russell 3000 Growth.

UnitedHealth Group Incorporated Price, Consensus and EPS Surprise

UnitedHealth Group Incorporated price-consensus-eps-surprise-chart | UnitedHealth Group Incorporated Quote

Optum Rx, UnitedHealth’s pharmacy benefit manager (PBM), could face increasing pressure as regulatory scrutiny intensifies around PBM pricing practices. President Trump’s “most-favored nation” executive order adds to the challenge by promoting more transparent, direct drug pricing, potentially diminishing the influence of intermediaries like PBMs.

Despite this, UnitedHealth still holds significant scale advantages. Overall, Optum continues to drive strong cash flow. UNH generated operating cash flows of $5.5 billion in the first quarter of 2025, which surged from the prior-year figure of $1.1 billion. Also, the company has been aggressively repurchasing shares. UNH rewarded more than $5 billion to its shareholders in the form of share repurchases and dividends during the first quarter of 2025. Its dividend yield of 2.95% is higher than the industry average of 2.42% and Cigna’s 1.96%.

The Case for Cigna

Cigna has distinguished itself through its strategic divestments of Medicare Advantage, Cigna Supplemental Benefits, Medicare Part D and CareAllies businesses to HCSC in March 2025. Its commercial-heavy model will deliver more predictable underwriting performance and give clearer near-term visibility. In the first quarter of 2025, it reported strong results, benefiting from the rising relationship with existing clients and premium rate hikes.

Cigna Group Price, Consensus and EPS Surprise

Cigna Group price-consensus-eps-surprise-chart | Cigna Group Quote

While its pharmacy benefit management arm, Evernorth, is benefiting from volume growth in Specialty and Care Services, it also faces similar regulatory risks as UnitedHealth due to the MFN order. Nevertheless, like UNH, Cigna’s diversification within its PBM operations offers a meaningful cushion against these emerging pressures.

Cigna has also responded proactively to mounting cost pressure by reshaping its leadership and customer focus. A major management reorganization elevated its CFO and COO game and linked executive compensation to customer satisfaction outcomes. Steps include hiring more claims/authorization staff and pledging transparency reforms, intended to restore trust and reduce denials and criticism.

During its first-quarter earnings, Cigna raised its full-year adjusted EPS guidance to at least $29.60, up from a prior forecast of $29.50. This upward revision stands in stark contrast to peers like UnitedHealth, Centene, and Molina, all of whom either lowered guidance or withdrew it entirely amid mounting cost pressures.

Cigna has a strong financial position, substantiated by solid cash reserves and robust cash flows. Its long-term debt-to-capital of 39.56% is lower than the industry average of 39.88% and UnitedHealth’s 42.87%.

Cigna stock is currently trading well below Wall Street’s average price target of $379.38, implying a 22.5% upside from current levels.

How Do Zacks Estimates Compare for UNH & CI?

Zacks Consensus Estimates favor Cigna at this stage. It has seen upward revisions in EPS estimates for the current year, while UNH has witnessed multiple downward revisions. The consensus estimate for CI’s 2025 earnings indicates an 8.6% increase from a year ago, while the same for revenues suggests 4.5% growth. On the other hand, the Zacks Consensus Estimate for UNH’s 2025 revenues indicates 12.3% year-over-year growth, but the same for EPS signals a massive 21% decline.

Valuation: UNH vs. CI

Valuation also favors Cigna. While UNH trades at a forward P/E of 12.67X, CI trades at a more modest 9.82. This valuation gap gives Cignaa more attractive risk-reward profile. In contrast, UNH’s premium pricing could limit near-term upside unless it delivers clear margin improvements. CI currently carries a Value Score of A, while UNH has a Value Score of B.

Price Performance Comparison

Over the year-to-date period, UNH faced selloffs tied to medical costs and investigation concerns. Its shares plunged 40.8% during the same time. Meanwhile, Cignashares have jumped 11.8%, outperforming the broader industry and the S&P 500 Index, supported by stronger momentum and clearer guidance.

Price Performance – UNH, CI, Industry & S&P 500

Conclusion

In a sector beset by heightened medical claims, regulatory risks and guidance withdrawals, Cigna emerges as the better option today. Its deliberate exit from Medicare Advantage, emphasis on commercial business, proactive customer-focused reforms, and clear earnings outlook distinguish it from its counterparts facing more severe turbulence.

UnitedHealth continues to command scale and cash generation, but its exposure to government program disruptions and regulatory scrutiny weighs heavily on its near-term prospects. For investors seeking less exposure to policy-driven volatility and a clearer earnings path forward, Cigna offers stronger upside potential and a more dependable risk-adjusted profile amid continued sector uncertainty.

UnitedHealth currently carries a Zacks Rank #5 (Strong Sell), while Cigna has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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