Can CVS Health Stock Hit $110?
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CVS Health (CVS) stock trades at 9.4 times earnings, compared with 22.3 for the median S&P 500 company. Making sense of that gap depends on whether that discount marks a sound business on sale, or a fair price for an operating margin still below where it stood three years ago. The shares closed at $109.14 as recently as July 21, 2026, a price 34.2% above their November 5 close. So what is a buyer getting for that low price?
CVS Health Brings In Plenty Of Cash
A buyer gets a business that produced $15.6 billion in free cash flow over the twelve months to September 2026, equal to 14.9% of its market value. Management says this strong cash flow will let CVS resume share buybacks in the fourth quarter of 2026. The company adds that cash flow so far in 2026 also came from improvements in working capital, not only from strong earnings.
That cash flows from the Aetna health insurance unit, the Caremark pharmacy benefits business and the retail pharmacy stores. Sales reached $421 billion over those twelve months, up 6.7% from a year earlier. That pace trails the 8.6% of the median S&P 500 company, so a buyer is paying for cash, not speed.
CVS’s Operating Margin Is Below Its 2023 Level
CVS kept 3.6% of its sales as operating income in the twelve months to September 2026, sitting above its 3.1% average for the twelve months to September 2024, 2025 and 2026. That rate still falls short of the 4.3% recorded in the twelve months to September 2023, and the margin fell in each of the next two periods to reach 2.7% by September 2025.
While sales grew from $348 billion in the twelve months to September 2023 to $421 billion, operating income barely moved: $15.1 billion against $15.0 billion. Management says Aetna is still on its path back to target margins.
CVS also carries heavy debt, equal to 72.2% of its market value against 18.8% for the S&P 500. A thin margin layered on top of that debt provides a fair reason for buyers to pay less.
Heavy debt weighs most when money gets tight. Here’s why cash beats debt in a squeeze.
How Management Is Working To Lift Margins
At Aetna, management has taken what it calls deliberate actions in its Medicare Advantage business and kept pricing disciplined. In fiscal Q3 2026, its medical benefit ratio, representing the share of premiums paid out as medical costs, was 91.3%, about 1.5 percentage points better than a year earlier. Across the entire company, the operating margin rose to 3.3% in that quarter from 2.4% a year earlier.
Management also raised its 2026 guidance for adjusted earnings to at least $8.20 per share, up from $8.00 in August. It expects at least $8.65 for 2027, even as it calls 2027 the low point for earnings at Health Services, its largest segment, where health plan clients are losing members. Health Services is the segment that includes the pharmacy benefits business.
What A CVS Buyer Is Betting On
A buyer at today’s price is betting that CVS finishes fixing a thin margin, not that the market has overlooked a healthy business. That buyer also signs up for the planned split into two public companies, an initiative management expects to complete in the first half of 2028. Under the plan, which CVS announced on November 4, 2026, during its fiscal Q3 2026 call, Aetna and Caremark will stay in CVS Health while the stores go to CVS Pharmacy. A return to the July high would put CVS at about 12.7 times its earnings per share over the twelve months to September 2026, still well below the median S&P 500 company’s multiple. The headline’s $110 sits just above that high, 35.3% over the $81.33 close of November 5. Aetna’s medical benefit ratio and management’s formal 2027 guidance, which will firm up that early $8.65 outlook, both arrive with the fiscal Q4 2026 report, expected in February 2027.
Now You Know CVS Health. Here Is A Better Way To Invest
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