Healthcare investing has felt like walking through quicksand this year. One moment, the sector looks ready to spring forward on breakthrough drugs and aging demographics, the next, it is yanked back by clinical trial disappointments or tariff fears.
Eli Lilly (NYSE:LLY | LLY Price Prediction) and Novo Nordisk (NYSE:NVO) have underperformed severely after significant gains in recent years due to those reasons, and Jim Cramer is now betting on an underdog to do well.
CVS Health (NYSE:CVS) has spent the past few years rebuilding after a series of profit declines tied to soaring medical costs inside its Aetna insurance arm. Cramer argues the repair work is finally paying off, pointing to a July earnings beat, a raised outlook, and the quiet retreat of Walgreens and Rite Aid.
CVS finds itself “the last man standing” in many markets, able to grab market share almost by default. Let’s look into what Cramer has to say.
What Cramer thinks about CVS now
Cramer usually rides the flow and does not speak too positively of stocks that don’t do well. CVS stock is still down over 33% from its 2015 peak, but may have turned a corner. The stock is up 67.3% year-to-date, and Cramer has noticed.
During a Mad Money episode on August 25, 2025, CVS stock was up “…more than 58% for the year”. Cramer said, “…how the heck did CVS pull that off?”
He elaborated, “CVS has become the last man standing in the retail pharmacy space as its last major rival, Walgreens, is set to be taken private and plans to close hundreds of stores in the process, while Rite Aid is suffering through its second bankruptcy by shrinking beyond all recognition.”
Per Cramer, “CVS already got pulverized. Last year, it was down 43%. [note: CVS was down 40.77% in 2024]” he further said, “Problem came from Aetna… prices were too low in a world of higher-than-expected medical costs… What they did really bad last year is what some other companies are doing this year.”
“CVS is finally seeing a turnaround from the managed care side of the business.”
Cramer went on to discuss CVS’ “phenomenal” earnings and believes “CVS no longer has any major rivals”.
CVS stock is “ridiculously cheap”
In the same segment, Cramer noted CVS stock was ridiculously cheap, as it trades at ~11 times forward earnings. He also pointed out that CVS stock comes with a “bountiful” yield, currently at 3.59%.
His bottom line is that CVS had a bad 2024 but is now fixing its problems.
If his lengthy praise session on the 25th of August wasn’t enough, he discussed it again on August 28th, saying “…I think CVS is crushing it.”
Should you follow Cramer and CVS stock now?
CVS Health is most certainly making a turnaround. The healthcare benefits segment is seeing a sharp recovery in margins. Healthcare benefits segment adjusted operating income is up ~$362 million year-over-year in Q2, with analysts expecting 14% EPS CAGR through 2028. Q2 total revenue in the benefits segment rose 11.6% in Q2. The company is cutting down aggressively on unprofitable investments and redirecting them to stronger segments.
For example, Aetna is leaving the Affordable Care Act individual exchanges by 2026. Instead, CVS will allocate resources to strengths like Medicare Advantage, where 65% of plans now rate 4.5 stars or higher.
Unlike the bottom line, revenue has continued growing and is expected to grow 5.46% for all of 2025 to $393.16 billion. 2026 revenue growth is expected to be 4.11% to $409.32 billion. Interest rate cuts should also aid it alongside the financial recovery, as total debt sits north of $82.2 billion.
Debt that high will make anyone balk if you value CVS by enterprise valuation, but this stock has historically traded at very high premiums when the pendulum swung in its favor.
With so many things moving in the right direction, I agree with Cramer.
The average price target is over $83, implying 14%+ upside potential. Price targets go up to $99. CVS stock may move beyond $100 to new highs if the CEO can keep executing and interest rate cuts kick in as expected.
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