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CVS Health (CVS) has made an impressive comeback in 2025, with its stock soaring 45% so far this year. This sharp rebound follows a tough 2024, when its shares dropped over 40% due to missed earnings and the withdrawal of annual forecasts.
The healthcare sector as a whole faced challenges last year, including rising medical costs, labor shortages, and inflation.
CVS’s performance has left its competitors in the dust—its 45% jump in 2025 easily outpaces Walgreens (WBA) (up around 15%), UnitedHealth Group (UNH) (up 0.6%), and Cigna (CI) (up nearly 7%). Strong fourth-quarter results for 2024 helped restore investor confidence in CVS, beating expectations and setting the stage for what many hope will be a lasting recovery this year.
With trends like growing Medicare Advantage enrollment and a shift toward outpatient care reshaping the healthcare industry, CVS’s turnaround under new CEO David Joyner is happening at a pivotal time. But after such a big rally, investors are left wondering: Is now the right time to buy CVS stock, or is its future growth already priced in? Let’s dive in.
CVS Health’s Financial Comeback
CVS Health (CVS) is a healthcare company that operates across several areas, including retail pharmacy, pharmacy benefit management (PBM), specialty pharmacy, and healthcare innovation. Its business model combines prescription drugs, over-the-counter products, and health services with its Aetna insurance arm to offer comprehensive healthcare options.
In 2025, CVS has made an impressive financial comeback under its new CEO David Joyner. After a rough 2024, when the stock dropped 40% due to missed earnings and rising medical costs in its insurance division, the company has turned things around.
The stock is up 45% in the year to date. This recovery was sparked by a strong fourth-quarter earnings report that reignited investor confidence. After hitting a 52-week low of $43.56 in December 2024, CVS has steadily climbed, gaining over 24% in just the past month.
CVS delivered solid results in Q4 2024, with revenue up 4.2% year-over-year to $97.7 billion and adjusted EPS of $1.19. For the full year, revenue reached $372.8 billion, backed by $9.1 billion in operating cash flow.
While its healthcare benefits division faced challenges, the pharmacy and consumer wellness segments showed steady growth. These results boosted investor confidence, pushing the stock up 9% after the announcement.
The turnaround is supported by a $2 billion cost-saving plan and efforts to improve margins in its Aetna insurance division. Medical costs remain high due to increased healthcare use among seniors, but CVS continues to work on its medical loss ratio, which stood at 94.8% in Q4.
CVS looks like a bargain compared to its peers. Its forward P/E ratio is 11.16x versus the sector average of 19.18x, and its PEG ratio of 0.73x suggests it’s undervalued — offering potential upside for investors looking for growth at a reasonable price.
Key Drivers Behind CVS Health’s Growth
CVS Health is making big moves in 2025 to reshape its business and drive growth. One highlight is the launch of the updated CVS Health app, which brings all its services into one place. From managing prescriptions to accessing personalized health tools, the app makes healthcare easier and more convenient for customers. These efforts not only improve customer experience but also strengthen CVS’s position as a leader in digital healthcare.
On top of these innovations, CVS continues to reward its shareholders with consistent dividends. The company recently announced a quarterly dividend of $0.665 per share, giving it an attractive forward yield of 4.06%, much higher than the healthcare sector average of 1.58%.
With a payout ratio of 38.54% and four years of consecutive dividend increases, CVS shows it can balance growth investments with shareholder returns. By combining tech-driven solutions with strong financial stability, CVS’s 45% stock rally in 2025 looks like more than just a lucky streak — it’s a sign of solid progress and long-term potential.
Analyst Ratings and Future Prospects
CVS’s 2025 outlook shows a company working hard to bounce back. Management has projected adjusted EPS between $5.75 and $6, with cash flow from operations expected to hit $6.5 billion. These numbers are an improvement from 2024, reflecting confidence in stabilizing its insurance margins and cutting costs effectively.
Analysts seem to share this optimism. Of the 23 analysts covering CVS, 17 rate it as “Strong Buy,” two suggest a “Moderate Buy,” and four recommend holding the stock. This gives CVS a consensus rating of “Strong Buy.” The average price target is $68, which offers a modest upside of about 3% from its current price.
Recent upgrades from Leerink Partners and Truist have pushed targets to as high as $75 and $76, citing improvements in Medicare Advantage margins and disciplined cost management.
However, not all analysts are entirely bullish. Morningstar recently lowered its fair value estimate for CVS from $93 to $86, citing ongoing challenges in its Aetna insurance division and slower-than-expected margin recovery in Medicare Advantage. Despite this, Morningstar still gives CVS a five-star rating, signaling that the stock remains undervalued relative to its long-term potential. While the recent rally has captured much of the recovery story, analysts believe there’s still room for incremental gains as CVS continues its turnaround journey.
Conclusion
CVS Health’s 45% rally in 2025 reflects a company making meaningful strides in its turnaround, driven by strategic innovations, improving financials, and strong analyst confidence. While the stock has already made significant gains, its attractive valuation, robust dividend yield, and promising growth outlook suggest there’s still room for long-term investors to benefit. For those considering jumping in, it might not be too late to capitalize on CVS’s renewed momentum.
