Finally, CVS Health stock is giving investors reason to breathe easy. After a rocky 2024 that saw the company cut profits and underperform in its various business segments, it just dropped some seriously bullish news-and Wall Street is listening.
On Thursday, CVS lifted its full-year profit forecast, sending its stock more than 8% higher in premarket trading, to $72.43. That jump builds on momentum from earlier in the year, when an earnings beat in February gave the first hint that a turnaround might be in motion.
What’s behind the renewed investor confidence? A mix of tighter cost controls, smarter operational moves, and a clear strategy from the new CEO, David Joyner, who arrived in October 2024. If you’re a CVS stockholder or thinking about becoming one, there’s a lot to unpack.
A Much-Needed Comeback
Let’s not forget, CVS’s stock tumbled over 40% last year alone, bruised and battered due to a series of profit warnings, its shaky performance on both the pharmacy and insurance front, and overall investor fatigue. It was like this health care giant’s reputation was on the ropes.
But now? We’re seeing signs of a controlled rebound. For Q1 2025, CVS posted earnings of $2.25 per share, demolishing analyst estimates of $1.70. The company is now guiding full-year adjusted EPS to $6.00-$6.20, up from a previous range of $5.75-$6.00. That’s a big confidence play,, nd investors are eating it up.
What’s Driving the Rebound?
- MLR: One of the single biggest wins this quarter was that CVS’ medical loss ratio fell to 87.3%, well below Wall Street’s expectations of 88.9%. That is, the company is spending less on patient care versus premiums collected; that’s a huge direct boost to margins.
- CVS Pharmacy & Health Services Revenue: 31.91 billion, above expectations for 30.96 billion. Its Health Services unit brought in 43.46 billion, also topping expectations. These segments were major headaches in 2024, so this rebound is a strong signal of restored performance.
- Strategic Streamlining: CVS said it would pull out of the Obamacare individual exchange market, referring to the move as a needed one to streamline its operations. Concomitantly, its PBM unit plans to eliminate Eli Lilly’s weight-loss medication Zepbound in favor of Novo Nordisk’s Wegovy, citing significant savings for clients. That is cost-conscious decision-making investors covet.
Can CEO David Joyner Deliver?
Since he took over last October, Joyner has wasted no time in cleaning house, e-shuffling top leadership and slashing costs. Though early days, the market clearly believes he’s steering the ship in the right direction. If the earnings trend holds, CVS could finally be climbing out of its slump and regaining its place as a reliable healthcare bet.
What to Watch Going Forward
- Medicare Advantage Costs: Much like other insurers, CVS still is subject to the macro pressures of increased healthcare demands in the Medicare Advantage space. As a matter of fact, those higher claims costs for older patients have not completely disappeared.
- PBM Competition: Competition in the space of pharmacy benefits is heating up, and dropping Zepbound may be a cost win today, but it is likely to raise eyebrows if patient or doctor backlash continues to grow.
- Regulatory Watchdogs: There is always the risk of federal scrutiny as CVS streamlines and makes bold product exclusions.
Final Take: Is CVS Stock a Buy?
The market is acting as if this is the beginning of a new chapter, and it very well might be. After months in the doldrums, CVS stock is finally showing signs of life, with earnings momentum and an proactive CEO at its helm.
Though it is not wholly out of the woods, investors who bet on continued recovery may find this an opportune entry point-especially if Joyner’s overhaul keeps delivering.
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