CVS Lifts 2025 Adjusted EPS Forecast Again: What's Driving the Move?

CVS Health CVS reported its second-quarter 2025 results last week, wherein adjusted operating income (AOI) rose 2% year over year to approximately $3.80 billion. This was supported by 39.4% AOI growth in Health Care Benefits and 7.6% in Pharmacy & Consumer Wellness (“PCW”). Adjusted earnings per share (EPS) came in at $1.81, down two cents from the prior-year quarter. Impressively, CVS raised its full-year earnings guidance to a range of $6.30-$6.40, up from the $6.00-$6.20 outlook shared in February, marking its second upward revision this year.

Performance and positive outlooks reflect the benefits of the company’s diversified model. Aetna’s multi-year margin recovery is a top priority, and CVS is making progress through organizational realignment, enhancing its talent, and using technology to automate and simplify processes. Medicare has been a key driver of this progress — supported by strong STARS for the payment year 2025, rationalization of both geographies and product mix through the Annual Enrollment Period, and CVS’ ability to understand cost trends and mitigate them whenever possible.

Meanwhile, Caremark maintains a strong position in the pharmacy benefit management market, with retention rates staying around the 90% historical level. CVS continues its efforts to reduce prescription and pharmacy costs by promoting competition, such as leading with Cordavis in the biosimilar space and, most recently, in weight loss indications on GLP-1. In retail pharmacy, the company focuses on ensuring ongoing access to medication across the country. PCW delivered another strong quarter despite ongoing reimbursement pressures, demonstrating the company’s ability to adapt to market changes.

Meanwhile, Health Care Delivery saw incremental pressure in the second quarter due to higher medical benefit ratios at Oak Street. CVS is working to improve the business through investments in technology, leadership changes and stronger partnerships with payer clients to ensure seniors continue to benefit from the industry-leading model.

CVS Health’s Rival Performance

Amazon AMZN reported worldwide operating income of $19.2 billion in the second quarter of 2025, up 30.6% year over year and $1.7 billion above its guidance range. The North America segment’s operating margin rose 190 basis points (bps) year over year, while the International operating margin climbed 320 bps. AWS margins declined to 32.9% from a record high of 39.5% in the first quarter. Amazon saw productivity gains in the transportation network, led by improved inventory placement, strong leverage on high unit volumes, and higher levels of in-demand inventory from both first-party and third-party selling partners.

Elevance Health ELV posted an operating gain of $1.6 billion in the Health Benefits segment, which was mainly impacted by higher medical cost trends in its Medicaid business and Affordable Care Act health plans. Meanwhile, Carelon's operating gain totaled $0.9 billion, up 33% year over year, primarily driven by improved Carelon Health performance and higher CarelonRx product revenues. On a consolidated basis, ELV’s adjusted operating expense ratio improved 140 bps to 10%, thanks to expense leverage associated with growth in operating revenues and ongoing expense discipline.

CVS’ Price Performance, Valuation and Estimates

In the past six months, CVS Health shares have risen 13.2% against the industry’s 10.8% fall.

CVS shares are trading at a forward 12-month price-to-earnings ratio of 9.14, much discounted from the 13.93 industry average. The stock sits with a Value Score of A.

In the past seven days, analyst estimates for the company’s 2025 and 2026 earnings have increased 1.5% and 1%, respectively.

CVS stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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