CVS Stock Alert: What to Know as CVS Plans Major Split

CVS Health (CVS) shares tumbled on Nov. 4 after the healthcare giant announced plans to split its business into two independent publicly traded companies. CVS will separate its retail pharmacy business from its insurance, pharmacy-benefit management, and healthcare-services operations, with the restructuring expected to be completed in the first half of 2028. 

Including today’s decline, CVS stock is trading nearly 30% below its year-to-date high in late July.

What We Know About CVS’s Planned Split

CVS’s proposed breakup would create two standalone businesses with distinct strategic focuses, unwinding much of the vertically integrated model the company spent years building. 

One company, which will keep the CVS Health name, will include Aetna, CVS Caremark, Signify Health, CVS Specialty, and Oak Street Health. The second company, to be called CVS Pharmacy, will house roughly 9,000 retail pharmacies, MinuteClinic locations, mail-order pharmacy operations, and related healthcare services.

Management believes the split will position each entity to pursue growth opportunities much more effectively. Still, investors appear cautious, as evidenced by the selloff on Wednesday.

Should You Buy the Dip in CVS Shares?

Other than management’s reassurance that the decision to split the business was made from a point of operational strength, CVS’s third-quarter earnings offer a significant reason to buy the dip. 

The healthcare giant’s revenue came in up 5.4%, while adjusted earnings also climbed to $2.09, both ahead of estimates. More importantly, management raised its full-year outlook as well, now expecting adjusted earnings per share (EPS) of $8.20. 

CVS also expects its EPS to grow further next year to $8.65, reinforcing that the Q3 strength will continue, which makes the stock even more compelling at current levels. 

CVS shares also currently pay a healthy dividend yield of 3.31%. 

Wall Street Remains Bullish on CVS Stock

Wall Street analysts also remain largely constructive on CVS stock, expecting it to extend gains in 2027. 

According to Barchart, the consensus rating on CVS Health sits at “Strong Buy,” with the mean price target of about $113 indicating potential upside of roughly 40% from current levels. 

On the date of publication, Wajeeh Khan did not directly have a position in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.