CVS Health Inc. (CVS) delivered an upbeat revenue outlook on Tuesday that caught Wall Street's attention. The healthcare giant projected 2025 revenue of at least $400 billion, a notable jump from the consensus estimate of $394.59 billion. The company also guided operating income to land between $4.37 billion and $4.54 billion, while raising its sales guidance to at least $397.3 billion.
Bank of America's Optimistic View
Following CVS's investor day, Bank of America analyst Allen Lutz came away with a more positive outlook on the company's growth trajectory. In a Wednesday note, Lutz wrote that CVS's emerging consumer app positions the company's pharmacy assets as "a differentiator that can drive structurally higher retention for Aetna and Caremark over time."
The firm maintains its Buy rating on CVS with a price target of $100, seeing the strategic pieces falling into place despite near-term headwinds.
Margin Strategy Under Pressure But On Track
CVS remains committed to restoring target margins at Aetna, though the Medicare Advantage margin outlook has been recalibrated to 3%–4% for 2025, down from the 4%–5% range in 2023. That's not exactly cause for celebration, but management appears resolute about getting back on track.
The company is pouring more capital into data and analytics to improve underwriting and refine pricing strategies. Those investments are already paying dividends—CVS spotted early warning signs in the ACA exchange market for 2025 and managed a quick exit. Management believes these enhanced capabilities will accelerate progress toward target margins and smooth out volatility from new membership cohorts.
The App That Could Change Everything
At its investor event, CVS unveiled a technology suite centered on "Engagement as a Service," designed to create an open, integrated consumer engagement platform spanning its businesses and select industry partners. The centerpiece is a unified app launching in 2026 that will bring together Aetna's medical benefits, Caremark's pharmacy benefits, and CVS's retail pharmacy services in one place.
Bank of America believes CVS's retail pharmacy division is well-positioned to accelerate adoption of this consumer app, which could deliver higher long-term engagement and retention across the enterprise. If consumers can manage their prescriptions, insurance benefits, and retail pharmacy needs in a single app, that's a sticky proposition that competitors will struggle to match.
Wall Street Raises the Bar
CVS's investor day sparked a wave of price target increases across the Street. Baird maintains an Outperform rating while lifting its target from $82 to $92. Morgan Stanley holds an Overweight rating and bumped its forecast from $89 to $93. Mizuho keeps its Outperform rating and raised its target from $88 to $95.
Barclays maintains an Overweight rating with a new price target of $93, up from $87. Piper Sandler showed the most enthusiasm, reiterating an Overweight rating and raising its target from $99 to $101.
CVS Price Action: CVS Health shares were up 1.09% at $79.28 at the time of publication on Wednesday.