CVS Health: A Compelling Buy Ahead of Investor Day as UBS and Analysts Signal Upside Potential

CVS Health (NYSE: CVS) has emerged as a standout performer in the healthcare sector, driven by strategic growth in its Medicare Advantage (MA) business and a robust earnings recovery. UBS upgraded the stock to 'Buy' and raised its price target to $79 from $67, and a broad analyst consensus projecting double-digit upside, the case for CVS as a compelling buy ahead of its investor day is gaining momentum.

Strategic Growth: Medicare Advantage Margin Recovery

The healthcare benefits segment, particularly Medicare Advantage, is a cornerstone of CVS's growth strategy. UBS highlights a projected $784 million increase in 2026 group MA EBIT, translating to $0.46 per share, driven by margin improvements. This aligns with broader industry trends, as MA enrollment expands and CVS optimizes its risk-adjustment models and pharmacy benefits management (PBM) integration. Analysts note that margin recovery in MA is accelerating, with adjusted earnings per share (EPS) growth expected to hit mid-teens in 2026.

The firm's ability to leverage its integrated care model-combining retail pharmacy, clinics, and health insurance-positions it to capture value across the healthcare continuum. For instance, data from UBS indicates that CVS's MA business is outperforming peers in cost containment, with net revenue per member per month (PMPM) rising 6.5% year-to-date. This operational discipline is critical in an industry where margin volatility has historically dented investor confidence.

Earnings Momentum and Analyst Consensus

Recent analyst reports underscore CVS's earnings resilience. As of November 2025, the stock closed at $79.94, trading near UBS's revised target but significantly below the broader analyst consensus. The 12-month average price target across Wall Street analysts stands at $89.41, implying an 11.83% upside, while some firms, like Wells Fargo, have set a $102.00 target-a 24.4% upside-citing "strong execution and visibility in key metrics" according to UBS analysis.

The analyst consensus is notably bullish: 18 analysts rate CVS as a "Strong Buy," with a 12-month target of $87.22 (13.76% upside) according to Simply Wall St. This optimism is rooted in CVS's ability to balance top-line growth with margin expansion. For example, the healthcare benefits segment's operating margin improved to 6.2% in Q3 2025, up from 5.1% in the prior-year period, reflecting disciplined cost management and pricing power.

Valuation Attractiveness and Buyback Potential

CVS is currently trading at a discount to its 10-year average price-to-earnings (P/E) ratio, offering additional upside through share repurchases. UBS notes that leverage ratios are improving, enabling the firm to accelerate buybacks without compromising its investment-grade credit profile. With a $10 billion share repurchase authorization in place, CVS could reduce its share count by ~3% annually, enhancing EPS growth through both organic performance and structural share buybacks.

Moreover, the stock's forward P/E of 12.5x is below the S&P 500 healthcare sector average of 14.2x, suggesting undervaluation relative to peers. This discount, combined with the firm's $18 billion in operating cash flow in 2024, creates a compelling risk-rebalance scenario as investors anticipate margin stabilization.

Conclusion: Positioning for 2025 and Beyond

CVS Health's strategic focus on Medicare Advantage, coupled with its earnings momentum and attractive valuation, makes it a standout in the healthcare sector. While the current stock price of ~$79.95 reflects optimism, the path to $89.41 (average target) or even $102.00 (Wells Fargo's high end) remains well-supported by fundamentals. As the firm prepares for its investor day, the emphasis on MA margin recovery, PBM integration, and disciplined capital allocation will likely reinforce its appeal to growth-oriented investors.

With a strong analyst consensus and a clear line of sight to earnings growth, CVS Health is not just a defensive play-it's a strategic bet on the future of healthcare.