CVS Earnings: 2026 Guidance Maintained After Strong Trends In Late 2025

Key Morningstar Metrics for CVS Health

• Fair Value Estimate: $97.00
• Morningstar Rating: ★★★★
• Morningstar Economic Moat Rating: None
• Morningstar Uncertainty Rating: High

What We Thought of CVS Health’s Earnings

In the fourth quarter, CVS Health CVS turned in 8% sales growth and 8% adjusted EPS decline, slightly higher than consensus estimates. The firm largely confirmed targets given at its December investor day as well, albeit trimming its operating cash flow outlook to $9 billion from $10 billion after a big beat in 2025.

Why it matters: Shares rose 3% in early trading Feb. 10, reflecting the significant outperformance of cash flow guidance in 2025, the largely stable 2026 guidance in an industry that has been anything but stable, and progress on its ongoing turnaround efforts.

• Those efforts appear to be paying off, and the firm generated $6.75 of adjusted EPS in 2025, up 25% from a weak base in 2024. That compares favorably with the 6%-10% profit growth outlook announced by management on the equivalent earnings call in early 2025.
• The main driver of this outperformance in 2025 was CVS’ medical insurance operations, as its medical cost ratio improved following a dismal 2024. The pharmacy benefit manager’s profits declined 1% in 2025 while retail operations grew 5%, including a strong end to the year.

The bottom line: We are maintaining our $97 fair value estimate, which reflects ongoing profit improvement, especially in its medical insurance operations that are still operating well below typical margins. Shares look moderately undervalued to us and could rise as margins increase over time.

• For 2026, CVS’ outlook for 4%-7% adjusted EPS growth to $7.00-$7.20 looks nearly all margin driven, given the slight decline in projected revenue. Our EPS estimates remain at the top end of management’s targets, reflecting this team’s tendency to guide conservatively.
• However, even when considering ongoing efforts to increase margins, our no-moat rating reflects weak economic profits expected through the next few years. CVS also has a history of giving away economic profitability through acquisitions, which keeps us cautious on the moat rating.