CVS Health Stock Faces Headwinds as Caremark Business Under Pressure

CVS Health (CVS) shares have risen nearly 29% in the past year, but despite a strong Q2 earnings report, management has flagged headwinds for 2027. The company's Caremark business is under pressure from the 340B drug discount program, where manufacturer restrictions and generic conversions squeeze margins.

Management raised full-year guidance to $7.90 to $8.10 per share, but the market seems skeptical of CVS's ability to offset membership losses with growth in GLP-1 weight loss drugs. The stock trades at a 10.1x forward multiple, well below UnitedHealth's 21x multiple.

CVS is facing a three-way PBM market alongside UnitedHealth and Cigna, with the latter rolling out a rebate-free pharmacy model that could pressure CVS to accelerate its transition. Management plans to detail specific 340B and membership impacts on the Q3 call, giving investors real numbers behind August's cautious commentary.