CVS Health (CVS) Could Be 27% Undervalued As Earnings Focus Sharpens

CVS Health stock reacts to upcoming earnings focus

CVS Health (CVS) heads into its next earnings report with Wall Street expecting quarterly earnings of $1.62 per share, placing fresh attention on how each business segment is contributing.

Recent headlines around CVS Health’s community housing projects and medication safety initiatives have landed against a mixed backdrop. The share price is US$90.25 after a 30-day share price return of 5.32% but a 90-day share price decline of 13.58%. At the same time, the 1-year total shareholder return of 19.03% and 3-year total shareholder return of 43.85% point to longer term gains that contrast with more recent weakness as investors weigh earnings risk and perceived growth potential.

Scan beyond CVS Health and review healthcare peers facing similar earnings questions with our curated list of list of solid balance sheet and fundamentals (25 results)

Bulls point to CVS Health’s long record of total returns, while bears focus on the recent share price slide and earnings risk. As you weigh valuation next, which case does current pricing lean toward?

Most Popular Narrative: 27% Undervalued

At a last close of $90.25, the most followed valuation story around CVS Health pegs fair value at $124, implying a sizeable gap that frames how some investors view upcoming earnings risk and reward.

CVS Health is no longer the broken Aetna plus drugstore story the market used for most of 2024–25. Through the first half of 2026 the company has raised full-year guidance twice, Aetna’s medical benefit ratio has improved, cash flow is running well ahead of plan, and all three operating segments are growing. The stock still trades as if the insurance rebuild is temporary and the PBM is about to be regulated into irrelevance.

See why 4 investors see CVS Health as 27% undervalued.

Result: Fair Value of $124 (UNDERVALUED)

Still, the Stars reset, and any renewed pressure on Aetna’s medical cost trend could quickly challenge the $124 fair value story around CVS Health.

Find out about the key risks to this CVS Health narrative.

Another view on CVS Health valuation

The story looks different once you move off that $124 fair value and focus on P/E. CVS Health trades on a 23.6x P/E, which is higher than peer companies at 19.8x, yet below its own fair ratio of 35.2x. That mix indicates that investors are paying a higher multiple today while still leaving some room for re-rating if earnings deliver.

That gap between the current P/E, the sector, and the fair ratio raises a practical question for you as earnings approach. Is this a premium that fairly reflects the risks around medical costs and debt, or a valuation that could still reset closer to the fair ratio as the story evolves, whether that develops positively or negatively.

See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

Sentiment on CVS Health is clearly split, which is exactly why the next move belongs to you. Weigh the trade off between downside risk and upside potential on your own terms, then pressure test your view against 4 key rewards and 2 important warning signs

Looking for more CVS Health style investment ideas?

If you stop at CVS Health, you risk missing other opportunities that fit your goals just as well, or even better, across different parts of the market.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include CVS.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]