Morgan Stanley Downgrades Cigna to 'Neutral'

Analyst Christine Arnold says the employee benefits giant could lose accounts during its shift to a for-profit company

Morgan Stanley downgraded Cigna Corp. (CI ) to neutral from outperform.

Analyst Christine Arnold downgraded Cigna based on incremental new information obtained this weekend at an employer forum that suggests the company's transformation to a for-profit employee benefits company from an indemnity insurance business is not proceeding smoothly. She believes Cigna's valuation does not adequately reflect the likelihood that it will lose accounts entering 2002 owing to transformation-related services issues. Arnold sees $7.98 2002 EPS, and $8.80 for 2003.

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