Last year was a rebound one for CVS Health (CVS +0.46%) and Amgen (AMGN 2.61%). After underperforming broader equities in 2024, both healthcare giants bounced back in 2025, outperforming the market handily, despite the rest of the sector not being as fortunate. Are there good reasons to think CVS Health and Amgen could once again top the market this year?
Let's examine closely how 2026 could unfold for both and determine whether they are worth serious consideration for long-term investors.
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1. CVS Health
CVS Health's financial results weren't exceptional in 2025, but after a couple of years of even worse ones, the market began to see clear signs of improvement. And that looks likely to continue in 2026, as CVS Health recently updated its guidance for the year, raising projections for revenue, operating income, and earnings per share compared to its previous guidance.
Meanwhile, the pharmacy chain is addressing some of the challenges it has faced in recent years, including rising costs and shrinking operating margins, especially in its Medicare Advantage (MA) business. This year, the company plans to significantly roll back its MA business and focus on profitable growth.
That will eventually lead to stronger margins. So, 2026 looks promising for the company, and one more reason to think it could perform well this year is that the stock appears reasonably valued. CVS Health is trading at 11.2 times forward earnings, compared to an average of 18.4 for the healthcare sector.
NYSE: CVS
Key Data Points
But what about beyond 2026? That's what's more important. And regardless of how CVS Health performs this year, the company appears to be a strong long-term investment. It has a vast network of pharmacies across the U.S., some of which have been part of their communities for decades. CVS Health also has diversified healthcare operations, which include its insurance business and some primary care services, allowing it to keep patients within its ecosystem.
All these are massive advantages that it can leverage as healthcare spending increases. Although it has faced competition from companies like Amazon, CVS Health has slowly adapted, notably by offering free and fast delivery services for prescription medications. CVS Health may or may not outperform the S&P 500 this year, but the stock is a strong pick for long-term investors, especially when considering the dividend.
With a 3.3% forward yield and having hiked its payouts by 33% in the past five years, CVS Health looks like a solid income stock.
2. Amgen
Amgen posted strong financial results last year, along with encouraging clinical progress on some of its programs, resulting in a market-beating performance. Can it do the same again in 2026? It might be hard for the company. This year, it is expected to see a significant impact from the loss of exclusivity of denosumab, a medication indicated for the treatment of various bone conditions. Amgen experienced this patent cliff last year.
In the third quarter, denosumab, sold under the brand names Xgeva and Prolia, generated $1.7 billion in sales, accounting for approximately 17.6% of the company's total revenue of $9.6 billion. That's a meaningful amount. Results are likely to be weaker this year due to biosimilar competition. True, the stock also looks reasonably valued, with a forward price-to-earnings ratio of 14.9. However, the company's shares could decline once it feels the full impact of biosimilar competition for denosumab.
NASDAQ: AMGN
Key Data Points
Even with this threat, there are several things to look forward to now. Amgen is racing toward some important regulatory filings, including that of rocatinlimab, a promising investigational treatment for eczema that performed well in phase 3 studies. Meanwhile, some of its current growth drivers will also continue to move in the right direction. That includes Tezspire for asthma and Tepezza for thyroid eye disease.
And Amgen has other exciting pipeline candidates. MariTide, an investigational weight loss therapy the company is developing, has recently started several phase 3 studies across diabetes and obesity. Even with near-term headwinds, the company is doing what a solid drugmaker worth investing in for the long haul ought to do.
Lastly, Amgen is also a terrific dividend stock, offering a forward yield of 3% and having increased its dividend every year since first initiating payouts in 2011.
