10 Best Performing S&P 500 Stocks So Far in 2025

3. CVS Health Corp. (NYSE:CVS)

Number of Hedge Fund Holders: 63

Year-to-Date Performance as of February 17: 46.65%

CVS Health Corp. (NYSE:CVS) provides health solutions in the US through its Health Care Benefits, Health Services, and Pharmacy & Consumer Wellness segments. The Health Care Benefits segment offers health insurance products and services. The Health Services segment provides pharmacy benefit management solutions. The Pharmacy & Consumer Wellness segment sells prescription and over-the-counter drugs and related products.

Its Health Services segment, particularly its PBM (Caremark), contributed to the stock’s recent surge. Q4 2024 revenue was about $47 billion, though down 4% from a year-ago period. For 2025, the segment is projected to generate about $185 billion in revenue driven by Caremark. Caremark negotiates lower drug prices, generating an estimated $100 billion in annual value for the US healthcare system. Initiatives like TrueCost for price transparency and high biosimilar adoption, such as converting over 90% of Humira patients, and generating $1 billion in savings, highlight Caremark’s focus.

While growth is currently tempered by headwinds in Medicare-related healthcare delivery, core pharmacy services are strong, with improved healthcare delivery performance expected from 2026. This is further reinforced by analyst upgrades. RBC Capital analyst Ben Hendrix raised the company’s price target to $74 from $58 and maintained an Outperform rating on February 15. He believes that CVS Health Corp. (NYSE:CVS) is past its earnings trough, with 2025 guidance exceeding expectations.

Ariel Global Fund bought the company earlier in the past year, believing that the stock’s price drop due to PBM and Medicare concerns presented an attractive entry point for a potential rebound. It said the following regarding CVS Health Corp. (NYSE:CVS) in its first quarter 2024 investor letter:

“We bought American healthcare company, CVS Health Corporation (NYSE:CVS), following recent concerns related to potential new laws affecting Pharmacy Benefit Managers (PBMs)—intermediaries that negotiate drug prices between insurers and pharmacies—and issues with pricing in its Medicare Advantage plans, a type of health insurance for senior citizens. Shares presented an attractive entry point after the company lowered its 2024 outlook. While investor apprehension regarding the new laws appears to have eased, utilization of Medicare Advantage plans is also stabilizing. Our purchase of CVS reflects our efforts to capitalize on temporary setbacks and secure positions in companies poised for a rebound.”