Should You Add CVS Health Stock to Your Portfolio Before Q3 Earnings?

CVS Health CVS is scheduled to report third-quarter 2025 results on Oct. 29, before the market opens.The Zacks Consensus Estimate for third-quarter earnings per share (EPS) suggests a 24.8% increase year over year to $1.36. The estimate has dropped 1.4% in the past 60 days. The Zacks Consensus Estimate for third-quarter revenues currently stands at $98.31 billion, suggesting a 3% increase year over year.Image Source: Zacks Investment ResearchThe diversified healthcare company has a solid earnings surprise history. Its bottom-line surpassed estimates in each of the trailing four quarters, the average beat being 22.57%.Image Source: Zacks Investment ResearchQ3 Earnings Whispers for CVSPer our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP, has a higher chance of beating estimates, which is the case here.Earnings ESP: CVS Health has an Earnings ESP of +0.28%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.Zacks Rank: The company currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks Rank #1 stocks here.Trends Influencing CVS Health’s Q3 PerformanceWe expect the company’s strong execution to have supported solid results across all segments in the third quarter of 2025. In Health Care Benefits, revenue growth was likely driven by the Government business, backed by the favorable impact of the Inflation Reduction Act on the Medicare Part D program. CVS is also expected to have made progress in driving operational improvements within Aetna.  Besides, the profitability metrics may have benefited from stronger underlying Government business performance and favorable year-over-year impact from changes to the risk adjustment estimates in the individual exchange business. The Zacks Consensus Estimate for the Health Care Benefits segment's revenues indicates a 5.5% year-over-year increase.Meanwhile, continued pharmacy client price improvements are expected to have pressured CVS’ Health Services segment results. Despite this, revenues may have benefited from pharmacy drug mix and brand inflation. In the health care delivery business, second-quarter results were affected by a higher medical benefit ratio at Oak Street Health. The company’s efforts to improve Oak Street’s financial performance via investments in technology, leadership enhancements and payer-client partnerships may have positively reflected in the third-quarter 2025 performance.Signify Health likely saw another quarter of increased in-home assessment volumes. In addition, improved purchasing economics are expected to positively impact the segment’s profitability. The Zacks Consensus Estimate for the Health Services segment revenues indicates a 3.4% increase year over year.CVS’ Pharmacy & Consumer Wellness unit likely sustained strong momentum in the third quarter of 2025, despite ongoing pharmacy reimbursement pressures. Growth in pharmacy same-store sales is expected to have been driven by the pharmacy drug mix, including branded GLP-1 drugs, and higher pharmacy same-store prescription volume on a 30-day equivalent basis. The segment may also have gained from additional volumes through the acquisition of prescription files from certain Rite Aid pharmacies.Going by the Zacks Consensus Estimate, revenues in the Pharmacy & Consumer Wellness segment are expected to increase 9.3% in the third quarter of 2025.CVS Stock Price Performance & ValuationYear to date, CVS shares have surged 79.9%, significantly outpacing the industry’s flat growth and the Zacks Medical sector’s 0.2% rise. The company also performed better than its peers, UnitedHealth Group UNH and Elevance Health ELV, during this period.CVS YTD Price ComparisonImage Source: Zacks Investment ResearchValuation-wise, CVS is trading at a forward 12-month Price/Sales (P/S) of 0.25X, lower than the industry average of 0.40X. The stock is graded a Value Score of A at present. Meanwhile, UnitedHealth Group and Elevance Health currently have a P/E of 0.71X and 0.38X, respectively.CVS Health’s One-Year P/SImage Source: Zacks Investment ResearchCVS Health: Investment ConsiderationThrough the strength of its diverse and scaled businesses, CVS is tackling some of the biggest healthcare challenges: affordability, access and inconsistent care coordination. The company continues to make steady progress on its margin recovery plan at Aetna through organisational realignment, strengthening talent and tech-driven enhancements that enhance service and reduce friction for members and healthcare professionals.Caremark, CVS’ pharmacy benefit manager (PBM), continues to play a crucial role in making prescriptions and pharmacy costs more affordable and lowering costs by increasing competition. Caremark took a formulary action on July 1, preferring Novo Nordisk’s weight loss medication, Wegovy, on its largest commercial template, to increase access to the GLP-1 drug at reduced prices. Earlier, CVS capitalised on the significant biosimilar opportunity with Cordavis, launching a low Humira biosimilar that now holds the largest U.S. market share.Amid ongoing footprint optimisation efforts, the company continues to maintain a pharmacy script share position of over 27%. The full transition of commercial scripts to the CVS CostVantage pharmacy reimbursement model this year marked a milestone, allowing payors to receive value more transparently. The company is now preparing to shift its government business to cost-based pricing models for 2026.To make health care experience more consumer-directed, CVS Health has committed $20 billion over the next decade to emerging technologies, including developing an open platform to streamline access across payers, providers, PBMs, pharmacies, and digital health tools. Following a strong second-quarter performance, the company raised its full-year 2025 guidance, now projecting adjusted EPS of $6.30 to $6.40 and total revenues of at least $391.5 billion.End Note: Buy CVS StockAll three segments are expected to have positively contributed to CVS Health’s performance in the third quarter of 2025, with the ongoing recovery at Aetna being a major highlight. The company appears well-positioned to continue its streak of earnings surprises. Its extensive reach, highly differentiated solutions, and ongoing innovation support its ability to address healthcare challenges. Combined with strong YTD performance and attractive valuation, the stock remains a compelling option for investors.Free Report: Profiting from the 2nd Wave of AI ExplosionThe next phase of the AI explosion is poised to create significant wealth for investors, especially those who get in early. It will add literally trillion of dollars to the economy and revolutionize nearly every part of our lives.Investors who bought shares like Nvidia at the right time have had a shot at huge gains.But the rocket ride in the "first wave" of AI stocks may soon come to an end. The sharp upward trajectory of these stocks will begin to level off, leaving exponential growth to a new wave of cutting-edge companies.Zacks' AI Boom 2.0: The Second Wave report reveals 4 under-the-radar companies that may soon be shining stars of AI’s next leap forward.Access AI Boom 2.0 now, absolutely free >>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 UnitedHealth Group Incorporated (UNH): Free Stock Analysis Report CVS Health Corporation (CVS): Free Stock Analysis Report Elevance Health, Inc. (ELV): 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