CVS Health Corporation

Investment Thesis

The Aetna recovery is real: adjusted operating income is up roughly USD 4.8B from the FY2024 trough, and management has raised full-year EPS guidance three times. But we question the durability of the beat. A large slice of the Q2 margin improvement came from one-off prior-year reserve releases rather than sustainable underwriting gains, while commercial membership is shrinking and Medicare Advantage star ratings have slipped. At roughly USD 96 the stock already prices in a clean recovery, so the rating is HOLD.