CVS Health has quietly transitioned from a multi-year earnings drawdown into a renewed growth phase, and the stock is beginning to reflect that. After absorbing elevated medical utilization and activist uncertainty the past two years, CVS now appears to have put a floor under earnings. With management reasserting guidance, and valuation still deeply discounted, price action is signaling that the market is starting to reprice CVS for growth. As the stock trends higher and builds a base, the risk/reward is increasingly skewed to the upside. Trade Timing & Technical Outlook Base Formation: Price has consolidated above $75, a zone that capped rallies in early 2024 while outperforming the S & P 500, and is now successfully holding that level as support. Upside Target: A sustained move above $82 opens the door to a measured move toward the $95 area, which aligns with prior highs and valuation normalization. Fundamentals CVS trades at a substantial discount despite guidance that implies a return to earnings growth and potential margin expansion: Forward P/E: ~11x vs. Healthcare Services Average ~18x 2026 EPS Guidance: $7.00–$7.20 (mid-teens growth off 2025 trough) Dividend Yield: ~3.3%, providing downside support while the turnaround plays out With earnings expectations reset, CVS offers a combination of yield, discounted valuation and upside within a leading sector. Bullish Thesis The 2026 margin reset: Medicare repricing positions Aetna (a unit of CVS) for improving medical benefit ratios, setting the stage for operating leverage as utilization normalizes. Vertical integration: Routing Aetna members into Oak Street Health clinics is lowering costs and creating a margin advantage over pure-play insurers. Valuation: At roughly 11x forward earnings, CVS requires only modest execution to justify meaningful upside. Options Trade To express a bullish view with defined risk, I favor selling the Feb 20, 2026 $80 / $75 Put Vertical @ $2.17 Credit. This entails: Selling the Feb 20, 2026 $80 Put @ $3.65 Buying the Feb 20, 2026 $75 Put @ $1.48 Maximum Reward: $217 if CVS holds above $80 at expiration Maximum Risk: $283 if CVS closes below $75 at expiration Risk to Reward: 1.3 to 1 View this Trade in OptionsPlay for Updated Prices Summary CVS has moved beyond the earnings trough that dominated the 2024-2025 narrative and is now positioned for margin recovery. With guidance re-established and a deeply discounted valuation, the balance of risk favors upside. As investors reprice CVS as a stable integrated healthcare operator it presents a compelling bullish setup into 2026. DISCLOSURES: None. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
