CVS Health Trades Cheaper Than Industry: How to Play the Stock?

CVS Health CVS appears to be attractively valued at present, as reflected in its Value Score of B. The stock has a forward five-year price-to-sales (P/S) ratio of 0.23, below its median of 0.29 and the Zacks industry average of 0.41. The valuation also compares favorably to UnitedHealth Group UNH and The Cigna Group CI — two of its close peers — which have a P/S of 0.61 and 0.29, respectively.CVS Health’s 5-Year P/SImage Source: Zacks Investment ResearchThe retail pharmacy giant continues to benefit from the strength of its diversified model. The company’s bottom-line expectations keep improving with solid execution of goals and financial commitments across each segment. Recently, CVS made the updated 2025-2026 flu vaccines available at its Pharmacy and MinuteClinic locations nationwide, along with a three-in-one combo test for Influenza A, Influenza B and COVID-19 at select Pharmacy locations across 38 states and the District of Columbia. Collectively, these factors have helped the stock surge 64.2% so far this year. CVS shares have outperformed the industry, the broader sector, as well as rivals UNH and CI in the same time frame.CVS’ YTD Price PerformanceImage Source: Zacks Investment ResearchCVS Remains Bullish on AetnaStabilizing the insurance arm has been a top priority for CVS Health, as evident in the progress made throughout the first half of 2025. The Medicare business showed year-over-year gains, reflecting the impact of improved star ratings for the payment year 2025. Aetna also made efforts to rationalize the products and geographies during MA bids and the annual enrollment period, creating a more optimal membership mix. In addition, CVS Health will exit the states in which Aetna independently operates ACA plans as of January 2026. The products have consistently underperformed, with no clear path to materially improve their position.In terms of innovation, Aetna has introduced a new approach to bundling approvals for prior authorizations for certain cancer-related scans and tests, which helps reduce the administrative load on providers, expedite treatment and lower uncertainty for members. Its new digital offering, Aetna Care Paths, is available in the Aetna Health app, simplifying the member experience by giving clarity about procedures and benefits that may be encountered and personalized care recommendations, all in one convenient location. Moreover, several new updates to the app and technology solutions like personalized cost tracking, provider bill matching and claims submission highlight Aetna’s strategy to leverage AI-powered technologies to enhance the healthcare experience.Strength in PCW Segment Is Another Tailwind In the Pharmacy & Consumer Wellness (“PCW”) segment, CVS Health continues to accomplish a high retail script share position despite optimizing store footprint. Performance is being supported by strong execution across the extensive community health destinations, labor and technological investments and robust omnichannel capabilities, even amid persistent reimbursement pressures. CVS’ front store business is improving with customer growth and retail share gains.Furthermore, the implementation of CVS Pharmacy’s CVS CostVantage model places CVS to bend the trajectory of the PCW business over time. CostVantage addresses the persistent reimbursement pressures in the retail pharmacy industry by offering greater transparency and simplicity, aligning pharmacy reimbursements directly to the company’s service offerings and prescriptions dispensed. With 100% of commercial scripts now moved, the company is making nice progress in transitioning the government business to cost-based pricing models for 2026.CVS Is Advancing Its Digital-First StrategyIn line with its digital-first, technology-forward strategy, the company is ramping up investments in fast-growing areas such as enterprise data platforms, cloud capabilities, and digital products to offer innovative solutions through mobile and web channels. The revamped CVS Health app, launched earlier this year, gives customers greater visibility into their healthcare journey and provides guidance on overcoming potential barriers to care.To address the interoperability challenge in the U.S. healthcare system, CVS Health has committed $20 billion over the next decade to create a more tech-enabled consumer health experience. Reported first by Yahoo Finance, this move will not only impact CVS and its vertically integrated businesses — including the pharmacy, health providers and Aetna — but also allow competitors and other players in the sector to connect with the CVS system.CVS’ Chief Experience and Technology Officer, Tilak Mandadi, noted that the company envisions a more proactive approach to healthcare, one that eases the burden on patients. While technology expansion will be a key to achieving this goal, CVS is not in favor of fully automating the system. The company has also teamed up with more than 60 healthcare and technology companies that support the Centers for Medicare and Medicaid Services Health Tech Ecosystem initiative, which is focused on laying the foundation for a next-generation digital health ecosystem.Earnings Estimate Trend for CVS HealthThe Zacks Consensus Estimate for the company’s 2025 earnings per share (EPS) currently stands at $6.34, a nearly 17% jump over 2024. Estimates have moved 3.9% north in the past 90 days. The consensus mark for 2026 EPS is pegged at $7.14, up 2.3% over the past 90 days, indicating 12.6% growth.Image Source: Zacks Investment ResearchEndnote: Buy CVS StockCVS Health’s ongoing actions to stabilize Aetna, as well as innovations, support its long-term growth prospects. Pharmacy & Consumer Wellness shows resilience, with the CostVantage model’s transparent approach to pharmacy reimbursements shaping the segment’s trajectory. Furthermore, the company is enhancing the overall healthcare experience through its digital capabilities and has pledged a $20 billion commitment to tackle a major industry challenge. The stock’s favorable performance and attractive valuation relative to industry and peers support the momentum of CVS Health’s diversified model. With analysts raising their earnings projections, CVS appears to be a compelling investment case right now. CVS carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Zacks Names #1 Semiconductor StockThis under-the-radar company specializes in semiconductor products that titans like NVIDIA don't build. It's uniquely positioned to take advantage of the next growth stage of this market. And it's just beginning to enter the spotlight, which is exactly where you want to be.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $971 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report UnitedHealth Group Incorporated (UNH): Free Stock Analysis Report Cigna Group (CI): Free Stock Analysis Report CVS Health Corporation (CVS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks