CVS Surges on Regulatory Relief, Medicare Advantage Push: Time to Buy?

CVS Health CVS has seen its stock surge by 53.7% in 2025, fueled by a potent combination of strong operational performance and a favorable regulatory outlook. The company raised its full-year 2025 EPS guidance on the first-quarter 2025 earnings call, which reflected solid execution across all business segments. Management emphasized a renewed focus on operational excellence, with a bolstered leadership team and a commitment to transforming healthcare delivery through digital innovation, affordability and improved access.At the same time, external tailwinds such as the removal of proposed Medicare Advantage and PBM limitations from the Senate tax bill have lifted investor sentiment, reducing near-term policy risk for CVS’ core businesses. Together, these factors are reinforcing investor confidence and propelling CVS Health’s momentum in 2025.Year to date, the stock has outperformed the broader Medical sector, the S&P 500 and its direct competitors, Herbalife Ltd HLF and Walgreens Boots WBA. While HLF and WBA gained 17.7% and 22.1%, respectively, during this period, the S&P 500 rose 1.8%. The Medical sector, in contrast, has declined 1.6% year to date.YTD Price ComparisonImage Source: Zacks Investment ResearchCVS Health to Benefit From Senate's Removal of PBM and Medicare Advantage CutsCVS Health is poised to benefit from the Senate’s latest tax bill revisions, which exclude proposed limits on Pharmacy Benefit Managers (PBMs) and cuts to Medicare Advantage programs.Through its Caremark division, CVS operates one of the nation’s largest PBMs, managing drug benefits for millions of Americans. The Senate's move to strip proposed PBM constraints removes a significant regulatory overhang that could have impacted pricing power, rebate negotiations and margins. As noted in CVS Health’s Q1 2025 earnings release, Caremark delivered stable performance despite industry headwinds, driven by disciplined formulary management and client retention. The legislative reprieve provides additional room for CVS to scale its value-based pharmacy services and negotiate more effectively on behalf of plan sponsors.Additionally, the Senate Finance Committee’s confirmation that Medicare Advantage cuts have been dropped is particularly beneficial for CVS Health’s insurance arm, Aetna, which has aggressively expanded its Medicare Advantage footprint. In recent earnings calls, CVS emphasized ongoing membership growth in Medicare Advantage. Preserving full federal funding ensures revenue stability and supports continued investment in member-centric services, such as in-home assessments and care coordination.Another Key TakeawayStreamlining Access and Lowering Costs: CVS Health is making care easier and faster by streamlining prior authorizations, with 95% of Aetna’s prior authorization requests now processed within 24 hours. Its bundled cancer care model is cutting delays and easing provider burden, with plans to expand to cardiology and musculoskeletal care.Meanwhile, its pharmacy segment continues to lead the industry, processing over 1.7 billion prescriptions annually while delivering high medication adherence, especially among Medicare Advantage members. Strategic investments in technology and cost efficiency are fueling this performance.On the affordability front, CVS is expanding access to critical therapies. It partnered with Novo Nordisk to offer Wegovy at lower costs through its weight management program and leads the U.S. market with its low-cost Humira biosimilar, Cordavis, generating over $1 billion in savings for clients.CVS Health Offers Relative Value Amid Mixed Peer ComparisonsIn terms of valuation, CVS Health’s forward 12-month price-to-earnings (P/E) is 10.37X, a discount to the S&P 500’s 21.86X.Image Source: Zacks Investment ResearchHowever, the stock is trading at a premium to the company’s competitors — Walgreens Boots Alliance’s average of 7.63X and Herbalife’s 3.77X.CVS stock’s premium over peers may be justified by its scale, efficiency and strategic focus on digital health, AI and value-based care. Meanwhile, its discount to the S&P 500 offers an attractive entry point for long-term investors seeking stable, growth-oriented healthcare exposure.CVS Health - A Buy NowCVS Health's strong year-to-date stock performance, improved operational outlook and favorable regulatory environment make it an appealing investment opportunity in 2025. With a diversified business model spanning pharmacy services and insurance through Aetna, CVS is well-positioned to capitalize on long-term healthcare trends. The company’s cost-control measures, digital transformation efforts and initiatives to improve care access and affordability are reinforcing investor confidence. This Zacks Rank #2 (Buy) stock holds potential for continued upside momentum on regulatory relief, courtesy of the proposed removal of PBM and Medicare Advantage cuts. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.5% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report CVS Health Corporation (CVS): Free Stock Analysis Report Herbalife Ltd (HLF): Free Stock Analysis Report Walgreens Boots Alliance, Inc. (WBA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks