Core Insights - CVS Health is currently attractively valued with a Value Score of B and a forward five-year price-to-sales (P/S) ratio of 0.23, which is below its median of 0.29 and the Zacks industry average of 0.41 [1] - The stock has surged 64.2% year-to-date, outperforming industry peers such as UnitedHealth Group and The Cigna Group [3][4] Financial Performance - The Zacks Consensus Estimate for CVS Health's 2025 earnings per share (EPS) is $6.34, reflecting a nearly 17% increase over 2024, with estimates having moved up 3.9% in the past 90 days [17] - The 2026 EPS estimate stands at $7.14, indicating a growth of 12.6% [17] Business Segments - CVS Health's diversified model continues to drive performance, with improvements in the Medicare business and a focus on optimizing Aetna's product offerings [7][10] - The Pharmacy & Consumer Wellness (PCW) segment is benefiting from strong execution and technological investments, maintaining a high retail script share [12][13] Innovations and Digital Strategy - Aetna has introduced new digital tools to enhance member experience, including Aetna Care Paths, which simplifies healthcare navigation [11] - CVS Health is investing $20 billion over the next decade to improve tech-enabled consumer health experiences, addressing interoperability challenges in the U.S. healthcare system [15][16] Market Position - CVS Health's stock performance and attractive valuation relative to industry peers support its diversified model and long-term growth prospects [18][19]

Core Insights - CVS Health's Health Care Benefits segment reported strong performance in Q2 2025, with revenues exceeding $36 billion, reflecting an over 11% increase year-over-year, primarily driven by government business growth influenced by the 2022 Inflation Reduction Act [1][8] - The company plans to exit the individual exchange business in 2026, anticipating variable losses between $350 million and $400 million for 2025 due to ongoing performance challenges [2][8] - CVS recorded a $471 million premium deficiency reserve related to its Group Medicare Advantage product line, raising the medical benefit ratio to 89.9%, a 30-basis-point increase from the previous year [3][4] Financial Performance - The adjusted operating income for CVS Health surged nearly 40%, benefiting from favorable changes in individual exchange risk adjustment estimates and stronger government business performance [1][8] - Medical membership as of June 30 decreased to 26.7 million, attributed to expected declines following the expiration of a premium grace period [2] - Days' claims payable improved to 40.9 days, a reduction of approximately 2 days sequentially, driven by a higher mix of pharmacy costs [4] Competitive Landscape - Elevance Health reported Q2 2025 operating revenues of $41.6 billion, a 12% year-over-year increase, mainly due to higher premium yields and growth in Medicare Advantage membership [5] - Humana's performance was bolstered by its CenterWell pharmacy and improved individual Medicare Advantage membership, alongside strategic Medicaid expansion efforts [6] Stock Performance and Valuation - CVS Health shares have appreciated by 27.5% over the past year, contrasting with a 16.7% decline in the industry [7] - The company is currently trading at a forward five-year earnings multiple of 10.65, below the industry average of 15.33, and holds a Value Score of A [9] - Consensus estimates for CVS's earnings in 2025 and 2026 show a bullish trend, with current estimates at 6.32 for 2025 and 7.14 for 2026 [10][11]

Group 1: Company Performance - CVS Health shares have increased by 17.1% over the past month, reaching a 52-week high of $73.23, and have gained 63% since the start of the year, outperforming the Zacks Medical sector and the Zacks Medical Services industry, which saw gains of -2.3% and 0.7% respectively [1] - The company has a strong record of positive earnings surprises, having beaten earnings consensus estimates in the last four quarters, with the latest EPS reported at $1.81 against a consensus estimate of $1.47, and revenue exceeding estimates by 5.54% [2] Group 2: Earnings Projections - For the current fiscal year, CVS Health is expected to report earnings of $6.32 per share on revenues of $390.17 million, reflecting a 16.61% increase in EPS and a 4.66% increase in revenues [3] - For the next fiscal year, earnings are projected to be $7.14 per share on revenues of $408.98 million, indicating a year-over-year change of 12.94% in EPS and 4.82% in revenues [3] Group 3: Valuation Metrics - CVS Health has a Value Score of A, with Growth and Momentum Scores of C and F respectively, resulting in a VGM Score of B, indicating it is a suitable choice for value investors [6][8] - The stock trades at 11.6X current fiscal year EPS estimates, below the peer industry average of 17.7X, and at 8.1X trailing cash flow compared to the peer group's average of 10.5X, with a PEG ratio of 0.81 [7] Group 4: Zacks Rank - CVS Health holds a Zacks Rank of 2 (Buy), supported by a solid earnings estimate revision trend, making it a favorable option for investors seeking stocks with strong potential [8] Group 5: Industry Comparison - CVS Health remains a strong choice within the Medical Services industry, which ranks in the bottom 64% of all industries, but still shows promising tailwinds alongside peers like Progyny, Inc. [9][11]

Industry Overview - The U.S. healthcare services market is projected to grow from $8.77 trillion in 2024 to $9.25 trillion in 2025, driven by telehealth, digital health, workforce shortages, and changes in reimbursement models [1] - CVS Health and Elevance Health are major players in this competitive market, each with extensive reach and diversified services [1][2] CVS Health Analysis - CVS Health, valued at $90.32 billion, is experiencing revenue growth across all operating segments, with a focus on restoring Aetna to target margins through organizational realignment and technology enhancements [2][3] - The company is enhancing its pharmacy services by acquiring certain Rite Aid pharmacies and implementing a new pharmacy model, CostVantage, to address reimbursement pressures [6][7] - CVS is investing $20 billion over the next decade in digital health initiatives, aiming for $500 million in cost savings in 2025 [7] - The company has a strong cash flow generation and is focused on improving financial performance in its Health Care Delivery segment [4][7] Elevance Health Analysis - Elevance Health, with a market cap of $70.71 billion, is facing challenges due to shifts in Medicaid and ACA membership, leading to increased medical costs and a downward revision of its 2025 EPS outlook to $30 [2][8] - The company closed Q2 2025 with 45.6 million medical members, a decrease of approximately 200,000, and a consolidated benefit expense ratio of 88.9%, up 260 basis points from the previous year [10][13] - Elevance is showing strength in its Medicare Advantage portfolio and is working to stabilize trends in high-cost areas through streamlined processes and AI-enabled tools [11][12] Financial Performance and Projections - CVS Health's EPS for 2025 is projected to grow by 16.6% to $6.32, with estimates trending upward [20][21] - In contrast, Elevance Health's EPS estimate for 2025 is $30.15, reflecting an 8.8% decrease, with estimates having declined by 12.4% in the last 90 days [22] - Year-to-date, CVS shares have increased by 59.4%, while Elevance shares have decreased by 15.9% [16] Conclusion - CVS Health is positioned for long-term growth with its digital investments and restructuring efforts, while Elevance Health faces challenges in the ACA and Medicaid markets, making CVS the stronger investment option [22][23]

Core Insights - The Health Services segment at CVS Health reported revenues exceeding $46 million in Q2 2025, marking a 10% increase year-over-year, and accounted for nearly 47% of consolidated net sales [1][7] - Adjusted operating income (AOI) for the Health Services segment fell 17.8% year-over-year to $340 million, influenced by rising costs and a $291 million litigation charge that increased operating expenses by 37.8% [1][2] - CVS has revised its full-year Health Services AOI expectation to at least $7.34 billion, a decrease of approximately $200 million due to higher medical benefit ratios in the Health Care Delivery business [3][7] Financial Performance - The Health Services segment's growth was supported by pharmacy drug mix and brand inflation, despite pressures from pharmacy client price improvements [1] - Oak Street's higher medical benefit ratio contributed to the decline in AOI, reflecting elevated medical costs and a robust mix of benefits offered [2] - CVS Health shares have increased by 58.7% year-to-date, significantly outperforming the industry average growth of 0.2% [6] Competitive Landscape - CVS Health faces strong competition in the PBM services sector from companies like Cigna and UnitedHealth Group, with Cigna's adjusted income from operations rising 1% year-over-year [4] - UnitedHealth Group's Optum Rx reported $38.5 billion in Q2 revenues, a 19% increase, driven by new customer additions and specialty products [5] Valuation Metrics - CVS Health is currently trading at a forward 12-month sales multiple of 0.22, lower than the industry average of 0.41, indicating a favorable valuation compared to competitors [8] - The consensus estimate for CVS's 2025 earnings has shown a bullish trend, with current estimates remaining stable [9][10]

Healthcare Sector Overview - The healthcare sector is underperforming, with bioarma companies struggling due to the Trump administration's policies and pressure on drug prices [1][2] - Managed care faces challenges as healthcare utilization increases and insurance companies struggle with pricing [2] CVS Health Performance - CVS Health is a rare outperformer in the healthcare sector, with its stock up more than 58% year-to-date [2][3] - CVS Health benefits from being the "last man standing" in the retail pharmacy space, as Walgreens faces privatization and store closures, and Right Aid shrinks [4] - CVS Health's past struggles, with its stock down 42% last year, set the stage for a turnaround [5] Etna (CVS Health's Managed Care Business) - Etna's managed care business experienced a turnaround after facing challenges due to underpricing in the face of higher medical costs, particularly in Medicare Advantage plans [5][6]

Company Performance - CVS Health has been a port in the storm for healthcare investors, with the S&P up over 58% for the year [2][3][20] - CVS's healthcare benefits division saw nearly 12% revenue growth with operating income up almost 40% year-over-year [6] - CVS posted a phenomenal 35 cent earnings beat off a dollar 46 basis [9] - CVS raised its full-year revenue guidance up by nearly $9 billion and boosted their full-year earnings outlook by 25 cents at the midpoint [10][11] - The health service division, which includes the Caremark PBM business and the intore medical clinics, put up a 102% revenue growth [12] - The drugstore business delivered a $15% billion revenue beat, with operating income up 76% year-over-year [13] Market Dynamics - CVS is benefiting from Walgreens' retrenchment and Rite Aid's bankruptcy, taking market share [4][14] - Comparable pharmacy sales were up 18% year-over-year [14] - CVS's medical benefits ratio clocked in at 899%, up 30 basis points year-over-year, but 80 basis points lower than Wall Street expectations [8] Investment Opportunity - CVS stock sells for just 11 times the midpoint of its new full-year earnings forecast and pays a $266 annual dividend, sporting a 37% yield [15][16] - UBS upgraded CVS to a buy following two strong consecutive quarters of execution [19]

Core Insights - CVS Health's Pharmacy & Consumer Wellness (PCW) unit has faced challenges due to pharmacy reimbursement pressures but reported a 12% year-over-year revenue increase in Q2 2025, with same-store sales up over 15% and prescription volumes rising nearly 7% [2][8] Group 1: Financial Performance - PCW revenues grew 12% year over year in Q2 2025, with same-store sales up more than 15% [8] - Same-store prescription volumes increased nearly 7%, attributed to investments in technology and staffing [2][8] - CVS Health shares have risen 59.1% year to date, significantly outperforming the industry's 0.2% growth [7] Group 2: Strategic Initiatives - CVS is advancing a new reimbursement model to reduce reliance on cross-subsidization, allowing for better pricing and contract alignment with market conditions [3] - The company is shifting its government business to cost-based pricing models for 2026 [4] Group 3: Competitive Landscape - Elevance Health and NACHC are integrating Food as Medicine programming with primary care Community Health Centers to address food insecurity and diet-related chronic conditions [5] - Kroger Co. reported a 3.2% growth in identical sales without fuel, driven by strong pharmacy and e-commerce performance [6] Group 4: Valuation and Estimates - CVS shares are trading at a forward three-year price-to-sales ratio of 0.23, below the industry average of 0.41, with a Value Score of A [9] - The consensus estimate for CVS's 2025 earnings shows a bullish trend [10]

Market Overview - The market faced challenges as technology and semiconductor stocks experienced significant selling, raising concerns about high valuations and the sustainability of the AI-driven rally [1] - The S&P 500 and Nasdaq Composite indices declined by 0.24% and 0.67%, respectively, indicating a cautious market sentiment [1] - There is a shift in focus towards value stocks due to the current market conditions [1] Value Stocks Evaluation - The Price to Cash Flow (P/CF) ratio is highlighted as an effective metric for evaluating value stocks, with companies like StoneCo Ltd. (STNE), CVS Health Corporation (CVS), Integer Holdings Corporation (ITGR), and USANA Health Sciences, Inc. (USNA) showing low P/CF ratios [2][10] - A low P/CF ratio indicates a favorable market price relative to the cash flow generated per share, making it a reliable indicator of financial health [5][10] Financial Health Indicators - Positive cash flow is essential for a company's liquidity, enabling it to manage debts, reinvest, and return value to shareholders, while negative cash flow indicates declining liquidity [7] - Analysts emphasize that cash flow is a more reliable measure than earnings, which can be influenced by accounting estimates and management practices [6] Value Investing Strategy - A comprehensive approach to value investing should include multiple metrics such as price-to-book ratio, price-to-earnings ratio, and price-to-sales ratio, alongside the P/CF ratio [8] - Stocks should be selected based on parameters like P/CF less than or equal to the industry median, a minimum price of $5, and a Zacks Rank of 1 or 2 for better performance potential [9][11][13] Company Performance Highlights - StoneCo has a Zacks Rank of 1, with a trailing four-quarter earnings surprise of 11.5%, and is projected to see sales and EPS growth of 7.6% and 10.4%, respectively [13][14] - CVS Health holds a Zacks Rank of 2, with a trailing earnings surprise of 22.6%, and is expected to grow sales and EPS by 4.7% and 16.6%, respectively [15] - Integer Holdings, also with a Zacks Rank of 2, anticipates sales and EPS growth of 7.8% and 20.4%, despite a 13.2% decline in share price over the past year [16] - USANA Health Sciences has a Zacks Rank of 2, with a trailing earnings surprise of 21.6%, and is projected to grow sales and EPS by 11.7% and 1.2%, respectively, despite a 21.1% decline in share price [17]

Gilead's shares fell after CVS said it hasn’t yet added its new HIV prevention shot to its commercial drug plans https://t.co/o7NpArMJfd ...