Cigna: A Strategic Buy at Fibonacci Support Amid Fundamental Strength

The healthcare sector has faced volatility in 2025, driven by regulatory uncertainty and shifting consumer behaviors. Yet, Cigna (NYSE:CI) presents a compelling investment opportunity at current levels. A confluence of technical validation—particularly Fibonacci retracement support and a bullish moving average crossover—aligns with robust fundamentals, including double-digit revenue growth and economies of scale. While customer growth challenges linger, the stock's undervalued multiple and strategic positioning in high-margin segments argue for a strategic buy on dips.

Technical Validation: Fibonacci Support and the Golden Cross

Cigna's recent pullback has brought it to critical technical levels, offering a high-probability entry point. Let's break down the evidence:

1. Fibonacci Retracement Levels:
   The stock's decline from its 2024 high of $358.58 to a low of $268.99 has formed key support zones. As of July 2025, the price hovers near the 61.8% retracement level at $333.80, a psychologically significant support (see ). This level has historically acted as a floor during pullbacks. A breach here would likely trigger a retest of the 50% retracement at $313.02, which aligns with the 50-day and 200-day moving averages.

2. Moving Average Crossover:
   The golden cross—where the 50-day SMA ($315.4) crossed above the 200-day SMA ($308.9)—remains intact. This bullish signal (see ) suggests short-term momentum is strong relative to the long-term trend. While the MACD has dipped into bearish territory, it's a temporary correction rather than a trend reversal.

3. Near-Term Outlook:
   Analysts project a dip to $272.98 by August, but this aligns with the $278.26 support zone (July 2024 lows). A close below this level would signal deeper weakness, but the forward P/E of 10.3x (see ) suggests significant downside protection.

Fundamental Strength: Revenue Growth and Economies of Scale

Cigna's Q1 2025 results underscore its resilience. Revenue surged 14.4% YoY to $65.5 billion, driven by its Evernorth Health Services segment, which leverages $255.3 billion in annual revenue to negotiate favorable terms with providers. This scale reduces costs per member and amplifies margins—a classic economies-of-scale advantage.

While medical customer numbers dipped 6% QoQ due to the Medicare divestiture, pharmacy customers grew 3% to 122.3 million, highlighting focus on high-margin specialty services. The 3.3% annualized customer growth rate since 2023 may lag peers, but revenue growth is being driven by increased spending per customer, not just volume. This shift reflects a strategic pivot toward profitable segments, not a weak customer acquisition engine.

Addressing Concerns: Customer Growth and Valuation

Critics argue that Cigna's customer slowdown and reliance on existing clients signal stagnation. Yet, the data tells a different story:
- Medicare Divestiture: The loss of 1.2 million Medicare customers was a strategic move to focus on core markets, not a failure of execution.
- Specialty Pharmacy Growth: Evernorth's expansion into oncology and rare disease therapies—segments with double-digit margin potential—will offset customer attrition.
- Valuation Discount: The 10.3x forward P/E contrasts with peers' average of 14.8x, pricing in excessive pessimism about customer retention.

Investment Thesis: Buy the Dip, Target $350

The technicals and fundamentals converge to create a compelling case:
- Entry Point: Accumulate shares at the 61.8% Fibonacci level ($333.80), with a stop-loss below the $278.26 support.
- Target: The 78.6% retracement at $339.50 offers a short-term upside, while the $375.34 consensus price target (implying an 18.3% return) reflects longer-term potential.
- Risk Management: Monitor the MACD for bearish divergence; if price breaches $333.80 without volume confirmation, reduce exposure.

Conclusion: A Strategic Buy with Upside

Cigna's technical setup at Fibonacci support zones and its fundamental moat—rooted in scale and margin expansion—make it a standout buy in a volatile healthcare sector. While near-term volatility is inevitable, the stock's valuation discount and strategic shift to high-margin services position it to outperform peers over the next 12–18 months. Investors should capitalize on the pullback, as the reward-to-risk ratio favors those willing to look past short-term noise.