<div id="readability-page-1"><div> <h2>Key Points</h2><ul><li>CVS surprised analysts with improved revenue and earnings in the first quarter.</li><li>The company is seeing a rebound from its health care benefits segment.</li><li>It is also seeing a surge in sales related to its Rite Aid acquisitions.</li><li>10 stocks we like better than CVS Health ›</li></ul>CVS Health (NYSE: CVS) may just have the prescription for your investing needs if you're looking for long-term growth. The shares of the nation's largest pharmacy chain had been overlooked until recently, because of the company's thin margins and relatively slow growth.However, over the past month, CVS stock has risen by around 24%. That's thanks to a strong first-quarter earnings report, a turnaround in its worst-performing segment, and subsequent analyst upgrades.Will AI create the world's first trillionaire? 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Continue »Here are three reasons why the rally for this healthcare company may have some legs, and one reason to still be cautious.<img src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-dXJsPWh0dHBzOi8vZy5mb29sY2RuLmNvbS9lZGl0b3JpYWwvaW1hZ2VzLzg2OTc3MC9waGFybWFjeS1kcnVncy1zaG9wcGluZy1tZWRpY2luZS5qcGcmdz03MDA?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="700" height="467" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-dXJsPWh0dHBzOi8vZy5mb29sY2RuLmNvbS9lZGl0b3JpYWwvaW1hZ2VzLzg2OTc3MC9waGFybWFjeS1kcnVncy1zaG9wcGluZy1tZWRpY2luZS5qcGcmdz03MDA"/>Image source: Getty Images. <h2>Earnings and guidance have improved</h2>In the first quarter, reported revenue jumped 6.2% year over year to $100.4 billion, while earnings per share (EPS) were $2.30, up 62% over the same period a year ago. Both numbers surprised analysts, who had predicted revenue of $94.4 billion and EPS of $1.93.The upbeat report led the company to raise its full-year guidance. EPS is now predicted to be between $6.24 and $6.44, up 4.9% at the midpoint, and adjusted EPS is expected to be between $7.30 and $7.50, up 4.2% at the midpoint. The company also said it now expects cash flow from operations to be at least $9.5 billion, up from $9 billion.<h2>The dividend yield is still quite attractive</h2>CVS offers a dividend, at its current share price, of around 2.8%, more than double the average dividend of the S&amp;P 500. The company's consistently high free cash flow allows it to maintain its payouts. In recent fiscal years, CVS has generated operating cash flow hovering between $9 billion and $10.5 billion.<h2>Its insurance segment is bouncing back</h2>CVS is a one-stop shop for medical needs. It's a pharmacy company, but it also offers healthcare insurance through its ownership of Aetna, and it's a pharmacy benefits manager through its ownership of Caremark. The three businesses give the company a vertically integrated healthcare ecosystem.This loop creates a defensive moat that pure-play retailers (such as Walgreens) and pure-play insurers (such as Humana) cannot easily replicate, positioning CVS to capture margins at multiple points of the healthcare value chain.The health care benefits segment, which includes Aetna, saw revenue rise 3.3% year over year to $35.9 billion.The rising medical utilization costs in the Aetna health insurance unit have been curbed, allowing better margins. Aetna's medical benefit ratio (MBR) -- the percentage of premiums spent on medical claims -- dropped sharply to 84.6% from 87.3% in the prior year's quarter. Those profits were helped by CVS' decision to exit money-losing Affordable Care Act individual exchanges in 2026, sacrificing low-margin membership volume to rescue its overall insurance profitability.Its other two segments also saw revenue rise. The pharmacy and consumer wellness segment reported a slight increase in revenue as CVS expanded its prescription volumes, bolstered in part by asset acquisitions from the ongoing closure of Rite Aid stores. The health services segment, which includes Caremark, reported revenue of $48.2 billion, up 11% from the same quarter a year ago.<h2>There is one concern, though</h2>While CVS appears to be improving profitability, one concern is that its debt remains a drag on performance. The capital-intensive strategy of acquiring massive health networks has left it saddled with a formidable mountain of leverage. Total long-term debt was $86.4 billion as of the first quarter, meaning the company is spending money on interest that it could otherwise use for expansion or stock buybacks.However, it is reducing its total debt, which fell 1.5% year over year to $175 billion. CVS Health appears to have found a way to strengthen its margins in the long term. Analysts are now pointing to an average price target of $101.58; ultimately, the stock appears to have room to climb.<h2>Should you buy stock in CVS Health right now?</h2> Before you buy stock in CVS Health, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and CVS Health wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $483,476!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,362,941!* Now, it’s worth noting Stock Advisor’s total average return is 998% — a market-crushing outperformance compared to 207% for the S&amp;P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of May 20, 2026. James Halley has positions in CVS Health. The Motley Fool recommends CVS Health. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. </div></div>

CVS Health's stock has surged 24% following a strong first-quarter earnings report, with revenue up 6.2% to $100.4 billion and EPS rising 62% to $2.30. The company raised its full-year guidance and offers an attractive dividend yield of 2.8%. Despite concerns over high debt of $86.4 billion, CVS is improving profitability and analysts project a price target of $101.58. However, it was not included in a list of top stock recommendations by The Motley Fool.

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CVS Health Stock Is Soaring. Could the Rally Just Be Getting Started?