CVS Health Stock Emerges as Top Pick Amid Strategic Growth Push

UBS has upgraded its outlook on CVS Health (NYSE: CVS), shifting its rating from "Neutral" to "Buy" while raising the price target from $67 to $79. The move comes as the healthcare giant demonstrates operational improvements and margin expansion, particularly in its Healthcare Benefits (HCB) division.

Compelling Valuation Despite Recent Gains

Even after a significant rally, CVS shares remain attractively priced, trading at a 2026 P/E ratio of approximately 9—below the 10-year average of 10. This discount persists despite analysts forecasting above-market earnings growth of 14% annually through 2028, compared to broader expectations of 12%.

Key growth catalysts include:

Should investors sell immediately? Or is it worth buying CVS Health?

• Projected $784 million EBIT boost from Medicare Advantage operations by 2026
• $100 million in anticipated synergies from the Rite Aid integration
• Potential share repurchases enhancing shareholder value

Operational Turnaround Gains Traction

Market strategists at UBS highlight visible progress in CVS Health’s restructuring efforts. "Our confidence in the company’s recovery trajectory has strengthened considerably," noted the firm’s research team. Early initiatives in cost management and service optimization are yielding measurable results, with the HCB segment showing particular promise.

Risks Loom on the Horizon

Investors should remain mindful of near-term challenges:

• Upcoming Medicare Advantage Star Ratings in October could impact sentiment
• Potential drug pricing regulations may create headwinds
• Technical indicators show the stock may be overbought (RSI above 85)

While short-term volatility remains possible, UBS emphasizes CVS Health’s long-term potential, suggesting the current rally reflects more than temporary market enthusiasm. The healthcare conglomerate’s strategic positioning and valuation gap present what analysts describe as a compelling investment opportunity.