Is CVS Health a Bargain After Its 76% Rally in 2025?

• Curious if CVS Health is a bargain or overpriced right now? You are not alone in wondering whether there is real value hiding in this well-known stock.
• Shares have surged an impressive 76.3% year-to-date and are up 45.7% over the past year, even as recent weeks brought some turbulence with a -2.4% dip in the last 7 days and a -5.6% move over the last month.
• Recent headlines have spotlighted CVS Health’s expanding role in healthcare services, such as its bold push into primary care and innovation in pharmacy benefit management. This strategic activity has fueled investor enthusiasm and shaped some of the stock’s strongest moves, while also introducing new risks to weigh.
• The latest analysis gives CVS Health a valuation score of 5 out of 6, which means it looks undervalued on nearly every metric we check. Let us break down the major valuation approaches CVS Health gets rated on, and stick around to see a smarter way to put all these numbers in context at the end of the article.

CVS Health delivered 45.7% returns over the last year. See how this stacks up to the rest of the Healthcare industry.

Approach 1: CVS Health Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company's intrinsic value by projecting its future cash flows and discounting them back to their present value. This approach helps investors gauge whether a stock's price fairly reflects its long-term earning power.

For CVS Health, the current Free Cash Flow (FCF) is $6.08 billion. Analyst estimates project this will grow steadily over the next five years, rising to $13.69 billion by 2029. Beyond 2029, further cash flow projections, extrapolated by Simply Wall St, suggest ongoing growth, with FCF expected to reach approximately $22.45 billion by 2035. All cash flow figures are stated in US dollars.

Applying these cash flow projections, the DCF model arrives at an intrinsic value of $315.88 per CVS Health share. This is significantly higher than the current market price, indicating the stock is trading at a 75.3% discount.

In short, based on the DCF valuation methodology, CVS Health stock appears substantially undervalued at present levels.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests CVS Health is undervalued by 75.3%. Track this in your watchlist or portfolio, or discover 907 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for CVS Health.

Approach 2: CVS Health Price vs Sales

The Price-to-Sales (P/S) ratio is a widely used valuation metric for assessing companies like CVS Health, where strong revenue generation is central and profit margins may fluctuate due to heavy reinvestment or complex operations. The P/S ratio helps investors evaluate how much the market is willing to pay for each dollar of revenue. This makes it a valuable tool for retail-focused businesses in the healthcare sector.

Growth expectations and risk levels both play a role in determining what a “normal” or “fair” P/S ratio should be. Companies with higher expected sales growth or lower risk typically command higher multiples. Elevated risks or slowing growth tend to push valuations downward.

Currently, CVS Health trades at a P/S ratio of 0.25x. By comparison, the average P/S ratio in the healthcare industry is 1.29x, and peer companies average around 1.09x. At first glance, this makes CVS Health appear significantly undervalued on a traditional comparative basis.

However, Simply Wall St’s Fair Ratio goes beyond these broad averages. It accounts for a range of factors that affect valuation, such as future growth rates, operating risks, profit margin profile, industry characteristics, and company size. This tailored approach provides a sharper lens for evaluating whether a stock deserves to trade at a premium or discount.

CVS Health’s Fair P/S Ratio is estimated at 1.24x. With the current ratio at 0.25x, this suggests the company is deeply undervalued, even when adjusting for its unique growth prospects and risks.

Result: UNDERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1418 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your CVS Health Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. A Narrative combines your perspective on CVS Health, turning your beliefs about its future—such as how fast revenue and earnings may grow, or what profit margins it can achieve—into a story that connects current numbers to an estimated fair value. Rather than relying on a static formula or consensus, Narratives put you in the driver’s seat, allowing you to align financial forecasts with your own unique investment thesis.

Simply Wall St makes this process easy and engaging: millions of investors explore, create, and update Narratives on the Community page, using life events, news, and data to support or challenge their views over time. Narratives are updated automatically when new information comes in, reflecting changes in company performance or industry outlook without any extra work from you. This means you can always see how your chosen Narrative stacks up. If your fair value estimate is above the current price, you might see an opportunity to buy, while a fair value below the market price could signal caution or a reason to sell.

For example, one CVS Health Narrative projects robust industry tailwinds and operational improvements, resulting in a fair value estimate near $99 per share. A more cautious perspective focused on ongoing margin and reimbursement pressures points to a fair value closer to $70, highlighting how Narratives bring different investment stories and decisions to life.

Do you think there's more to the story for CVS Health? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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