Parkev Tatevosian, CFA on $CVS (Nov 4, 2026)

We have huge news for CVS stock investors, as Bloomberg reports that the company is discussing plans to spin off its retail pharmacy business. This could be a huge undertaking, given that CVS Health is one of the largest companies in the world, both in terms of its revenue over the past twelve months and the number of its existing locations.

Therefore, I wanted to discuss the details of this announcement, the market reaction, how I value CVS, and what my estimate of the fair value of this company is. As you probably know, traditional store sales have declined for most of the past decade, as consumers have shifted to online shopping and reduced their visits to stores.

This makes managing an organization with nearly 9,000 retail pharmacies a difficult process, especially with the continued rise in employee wages at those locations.

Minimum wage laws are currently being passed in various states, increasing the costs that must be paid. Given these dynamics, namely fewer customer visits and higher operating costs, the situation does not look good.

Therefore, it is understandable that the company would look for ways to exit these activities. They have already closed hundreds of sites, and I wouldn't be surprised if they continued this trend of closing more sites even if the exit process is not completed, in an effort to improve the service provided to customers.

CVS shares rose as much as 3.7% in after-hours trading following the Financial Times report.

A representative for CVS did not immediately respond to a request for comment. A company of this size undertaking a divestment process of this kind is not an easy task to manage.

Therefore, details will be slow to emerge, and management may wish to do so at its own pace, discussing the matter in the next quarterly investor update.

However, if the rumors continue to spread, and management continues to monitor the stock price's reaction to these developments, it may be forced to come out and provide more details to investors.

CVS stock has already risen by 15% since the beginning of 2026, in addition to dividend payouts.

It has been one of the best performing stocks, especially when measured on a risk-adjusted basis. This is not one of the high-risk stocks. In fact, it is one of the least risky stocks.

As a healthcare company, it is not as strongly correlated with macroeconomic performance as some other, more cyclical companies. I have rated this stock as a buy opportunity throughout the year, and my last update was on August 13, 2026, when I rated it again, reaffirming my buy recommendation with a low level of confidence and conviction.

Interestingly, Wall Street analysts who follow CVS are forecasting earnings per share growth of around 12% for CVS over the next few years.

That would be a positive outcome for investors. Double earnings per share growth for a company in this mature sector, with stores closing instead of opening new ones, is a very successful outcome if the company actually achieves these results over the next few years.

One of the biggest concerns about CVS is its large debt balance. The company now has over $74 billion in total long-term debt. It is one of the most indebted companies in the United States.

Therefore, the stock is trading at a forward price-to-earnings ratio of 10.72, a figure that—if you recall—is lower than the long-term earnings per share growth estimates projected by Wall Street analysts who follow CVS.

Typically, I see this as a positive, and it's a very attractive situation when a company is expected to grow its earnings per share at a rate greater than its future earnings multiple.

This is a very attractive rating. It's another way of looking at the price-to-earnings-to-growth (PEG) ratio.

Therefore, I also took this opportunity to update my assessment of CVS' discounted cash flows. I have raised my estimates due to the company's better performance here in 2026, not only in terms of share price, but also in terms of business performance.

I estimate the fair value at over $120, and as of today's market close, excluding after-hours trading, the stock was trading at $91.41, leaving room for an increase of over 30% in its current price compared to my estimate of the fair value.

So, to answer the question I posed in the title, I do believe that this stock represents a buying opportunity. This news is a positive development, making me more optimistic about the company's long-term prospects.

I will reaffirm my buy rating today, November 3, 2026, for CVS stock.