In this article, we will look at the 10 Best Medical Stocks to Buy According to Billionaires.
Why are Healthcare Stocks Under Pressure?
Some experts view medical, healthcare, and big pharma stocks as immune from trade carnage, making them a safe haven amid the uncertainty brought about by Trump’s tariffs. On April 8, Mizuho Securities America healthcare sector strategist Jared Holz appeared on CNBC’s ‘Power Lunch’ to talk about whether the speculations around the healthcare sector being a safe haven during market turmoil are true. He also discussed why healthcare companies are failing to get increased investor respect, given that healthcare is 20% of the American economy, which translates to around 1/5th of the country’s entire national output.
Holz said that the country’s major healthcare and pharmaceutical companies undoubtedly help fight its healthcare problems. However, when we look at their financial models and the way their businesses are currently set up, we have got generic patent cliffs over the next 5-7 years on the medium to long-term angle of the company, along with price concessions with the IRA and some of the things the Biden administration put into place. We have also got pricing degradation over the near term, and between those two lies competition and other setbacks. The models thus never line up well enough for investors to have a lot of confidence, as the business models do not lend themselves to long-term viability. These are the primary reasons the sector and stocks have been under pressure for so long.
READ ALSO: 10 Best Mid Cap Biotech Stocks to Buy and 12 Best Diagnostics Stocks to Invest In Right Now.
Is Healthcare a Safe Haven Amid the Ongoing Tariff Turmoil?
Holz further opined that managed care, particularly the government-centric names, are somewhat safe as they are insulated from tariffs as US-based companies. In fact, the economic slowdown is actually beneficial for them as they want less utilization and less patience through the system, which is how they typically beat numbers. He said that managed care is having a good day, and investors might think about owning some companies in the sector.
It is, however, a relative game, as there are several different variables at play, and investors are essentially playing a game of hopscotch in an attempt to jump from one area to another, whether it’s tariffs, drug pricing, or other public policies. He painted a similar picture for medical device stocks that are more US-centric. These two sectors thus have less risk relative to others, making them somewhat of a safe haven.
With these trends in view, let’s look at the 10 best medical stocks to buy according to billionaires.
A closeup shot of a laboratory technician handling a medical device used for fertility treatments.
Our Methodology
In this article, we first sifted through ETFs and financial media reports to compile a preliminary list of stocks. We then examined Insider Monkey’s exclusive database of billionaire stock holdings to select the 10 best medical stocks with the most billionaire investors. These billionaires are founders or managers of some of the world’s leading hedge funds and companies.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Medical Stocks to Buy According to Billionaires
10. Elevance Health, Inc. (NYSE:ELV)
Number of Billionaire Investors: 16
Number of Hedge Fund Holders: 73
Elevance Health, Inc. (NYSE:ELV) is a health company that operates through the following segments: Health Benefits, CarelonRx, Carelon Services, and Corporate and Other. The Health Benefits segment offers a range of health plans and services, while the CarelonRx segment manages pharmacy services. The Carelon Services segment offers various healthcare-related services by integrating behavioral, physical, pharmacy, and social services.
The company has solid operations. It reported $45.0 billion in operating revenue in fiscal Q4 2024, reflecting an increase of $2.5 billion, or 6%, compared to the prior-year quarter. Operating income for the year reached $175.2 billion, up $5.0 billion, or 3%. This growth was attributed to higher premium yields in Elevance Health, Inc.’s (NYSE:ELV) Health Benefits segment, growth in CarelonRx product revenue, and acquisitions undertaken in 2024.
On April 9, Guggenheim initiated coverage of Elevance Health, Inc. (NYSE:ELV) with a Buy rating and a $518 price target. The same day, Mizuho also raised the firm’s price target on the company to $505 from $455, keeping an Outperform rating on the shares. The company takes the tenth spot on our list of the best medical stocks to invest in according to billionaires.
Artisan Select Equity Fund stated the following regarding Elevance Health, Inc. (NYSE:ELV) in its Q4 2024 investor letter:
“Elevance Health, Inc. (NYSE:ELV) took a couple of blows this quarter. First, it warned that its Medicaid earnings would come in below expectations this year. The Medicaid business has been in the spotlight as a result of COVID-19. Medicaid rolls filled up during the pandemic, but then rolls started to come down as enrollees lost eligibility when the economy began normalizing. This has made estimating the severity and health trends of the remaining population difficult. So far this year, cost trends have been much worse than expected and are out of line with Elevance’s approved rate structure. Margins in the Medicaid business, therefore, will be down this year, and overall profits are likely to be flat. We believe this is a temporary situation. State Medicaid programs are legally required to pay actuarially sound rates to the providers of Medicaid services, such as Elevance. Rates are expected, therefore, to move upward over the next 12 to 18 months, restoring Elevance’s margins to a more normal level.
The second issue for Elevance is investor sentiment. A mentally deranged young man murdered top executive of United Healthcare, the largest health insurer in the country. This led to an Internet frenzy of vicious, inaccurate and, frankly, deplorable criticisms of health insurance companies and their executives. Negative and controversial headlines tend to hurt share prices. This was true of Elevance’s stock in the aftermath of this heinous crime. The share price has fallen to extremely attractive levels, trading currently at about 11X earnings. We added to our position during this weakness.”
9. Thermo Fisher Scientific Inc. (NYSE:TMO)
Number of Billionaire Investors: 16
Number of Hedge Fund Holders: 100
Thermo Fisher Scientific Inc. (NYSE:TMO) provides analytical instruments, reagents, equipment, software, and other services for analysis, research, diagnostics, and discovery. It operates through the Analytical Instruments, Life Sciences Solutions, Laboratory Products and Services, and Specialty Diagnostics segments.
Analysts are bullish on the stock due to its recent strategic acquisition of SOLV’s Purification and Filtration business, valued at $4.1 billion. The acquisition is anticipated to boost Thermo Fisher Scientific Inc.’s (NYSE:TMO) standing in the bioprocessing sector, especially in filtration, aligning with its long-term growth strategy.
In addition, the company is on a solid growth trajectory and reported $11.4 billion in revenue in fiscal Q4 2024, reflecting a 5% year-over-year growth. Its strong cash position further bolsters its standing, as it generated over $7.3 billion in free cash flow in fiscal 2024. Thermo Fisher Scientific Inc. (NYSE:TMO) also has a strong dividend yield, with seven consecutive years of growth. It outperformed the sector median of two years by 250%, reflecting its ability to return value to its shareholders.
RBC Capital analyst Conor McNamara maintained a Buy rating on Thermo Fisher Scientific Inc. (NYSE:TMO) on April 1 and set a price target of $694.00. It ranks ninth on our list of the 10 best medical stocks to buy according to billionaires.
8. Merck & Co., Inc. (NYSE:MRK)
Number of Billionaire Investors: 16
Number of Hedge Fund Holders: 91
Merck & Co., Inc. (NYSE:MRK) is a biopharmaceutical company that delivers health solutions to advance the treatment and prevention of diseases in animals and people. Its Pharmaceutical segment offers vaccines and human health pharmaceutical products, which typically consist of therapeutic and preventive agents. Its Animal Health segment develops, discovers, manufactures, and markets a range of vaccines and veterinary pharmaceutical products.
The company is experiencing some headwinds, negatively impacting its revenue outlook. For instance, it has temporarily stopped the shipments of its HPV vaccine Gardasil to China until mid-2025 due to weak discretionary spending. Despite these short-term challenges, Merck & Co., Inc. (NYSE:MRK) has strong operations, supported by robust demand for its diverse and innovative portfolio. Its Keytruda drug for cancer treatment is performing well, and the launch of Winrevair, a drug that treats pulmonary arterial hypertension (PAH), is also boosting revenue growth for the company.
Goldman Sachs analyst Asad Haider maintained their bullish stance on the stock, giving it a Buy rating on April 8. The analyst believes that the current market valuation is overly pessimistic, and it appears to be undervaluing Merck & Co., Inc.’s (NYSE:MRK) Animal Health business, which generates significant revenue and is anticipated to grow in the future. This presents a mispricing opportunity for investors, according to the analyst. Merck & Co., Inc. (NYSE:MRK) ranks eighth on our list of the top medical stocks to buy now.
GreensKeeper Asset Management, an investment management company, released its Q3 2024 investor letter. Here is what the fund said:
“Merck & Co., Inc. (NYSE:MRK) was our second-largest detractor this quarter, declining -8.3%. MRK’s leading HPV vaccine, GARDASIL 9, faced challenges internationally due to inventory buildup within its Chinese distributor, which is expected to reduce shipments for the remainder of 2024. Despite this short-term impact, the long-term outlook for GARDASIL 9 remains promising. Meanwhile, the company’s $27 billion Keytruda cancer juggernaut continues to grow at a healthy clip, powering earnings growth.”
7. Universal Health Services, Inc. (NYSE:UHS)
Number of Billionaire Investors: 17
Number of Hedge Fund Holders: 49
Universal Health Services, Inc. (NYSE:UHS) provides hospital and healthcare services. The company operates through the Acute Care Hospital Services, Behavioral Health Care Services, and Other segments.
Universal Health Services, Inc. (NYSE:UHS) reported a 2.2% growth in adjusted admissions to its acute care hospitals on a same-facility basis during fiscal Q4 2024. Same-facility net revenues in the company’s acute care hospital segment also rose by 8.7% during the quarter, supported primarily by a 5.3% growth in net revenue per adjusted admission.
During fiscal Q4 2024, same-facility revenues at its behavioral health hospitals grew 11.1%, supported by an 8.7% increase in revenue per adjusted patient day. Same-facility revenue rose by 7.4%, excluding the year-over-year growth in Medicaid supplemental payments. On April 9, Guggenheim initiated coverage of Universal Health Services, Inc. (NYSE:UHS) with a Buy rating and a $208 price target. The company ranks seventh on our list of the top medical stocks to buy now.
6. Bristol-Myers Squibb Company (NYSE:BMY)
Number of Billionaire Investors: 17
Number of Hedge Fund Holders: 88
Bristol-Myers Squibb Company (NYSE:BMY) is a biopharmaceutical company that discovers, develops, and delivers advanced medicines for serious diseases. Its medicines fall into various therapeutic classes, including hematology, oncology, cardiovascular, immunology, and neuroscience.
The company has a strong drug portfolio and robust pipeline due to acquisitions and partnerships, forming a base of a wide economic moat. For instance, its acquisition of Celgene strengthened its pipeline, providing it with a strong entrenchment in blood cancer. Bristol-Myers Squibb Company’s (NYSE:BMY) recent acquisitions of oncology firms RayzeBio and Mirati and neurology firm Karuna have further bolstered its overall pipeline.
Bristol-Myers Squibb Company (NYSE:BMY) has also exhibited strong performance in dividend growth, with eight consecutive years of increases and outperforming the sector median of two years by 300%. It has maintained dividend payments for 35 consecutive years, surpassing the sector median of 15 years by 133%. This reflects the company’s strong financial health and ability to deliver value to shareholders.
5. Johnson & Johnson (NYSE:JNJ)
Number of Billionaire Investors: 18
Number of Hedge Fund Holders: 98
Johnson & Johnson (NYSE:JNJ) develops, manufactures, and sells a range of products in the healthcare field through its subsidiaries. With a primary focus on products related to human well-being and health, the company operates through two segments: Innovative Medicine and MedTech. Its Innovative Medicine segment encompasses various therapeutic areas, including infectious diseases, immunology, neuroscience, metabolic and cardiovascular diseases, pulmonary hypertension, and oncology. The MedTech segment includes an elaborate range of medical devices and products used in cardiovascular intervention, orthopedic, interventional solutions, surgery, and vision fields.
Johnson & Johnson (NYSE:JNJ) has strong fundamentals. It reported sales of $88.8 billion for fiscal year 2024, reflecting a 4.3% year-over-year growth. These strong results reflect the company’s high-growth strategy. It has a solid balance sheet and generates enough cash flow through its operations to cover its high-yielding dividend.
On January 13, Johnson & Johnson (NYSE:JNJ) announced the $14.6 billion acquisition of neurological drugmaker IntraCellular. This acquisition will allow the company access to Caplyta, an oral drug for the treatment of bipolar disorder and schizophrenia.
On April 9, Goldman Sachs analyst Asad Haider resumed coverage with a Buy rating on Johnson & Johnson (NYSE:JNJ) and set a price target of $172.00. Morgan Stanley also raised the firm’s price target on the company to $164 from $163, keeping an Equal Weight rating on the shares. According to billionaires, the company ranks fifth on our list of the top medical stocks to invest in.
4. Danaher Corporation (NYSE:DHR)
Number of Billionaire Investors: 18
Number of Hedge Fund Holders: 101
Danaher Corporation (NYSE:DHR) designs, manufactures, and markets professional, medical, industrial, and commercial products and services, making it a significant diagnostics stock. It operates through Diagnostics, Biotechnology, Life Sciences, and Environmental and Applied Solutions. Its Biotechnology segment offers a range of equipment and consumables for biological medicines. In contrast, the Life Diagnostics segment offers clinical instruments, devices, consumables, and other services for diagnosing and treating diseases.
Strong free cash flow generation is a competitive point for the company, as it generated $5.3 billion of free cash flow in fiscal 2024. This resulted in a free cash flow to net income conversion ratio of around 135%. Danaher Corporation (NYSE:DHR) is also active in the M&A domain, completing several strategic acquisitions throughout fiscal 2024 that brought innovative solutions to the company.
Danaher Corporation’s (NYSE:DHR) focus on high-margin bioprocessing in its life sciences sector is central to its growth strategy. The anticipated recovery in bioprocessing is expected to significantly increase the company’s earnings per share (EPS) in the coming years.
On April 7, Citi added Danaher Corporation (NYSE:DHR) to the firm’s Focus List while keeping a Buy rating on the shares with a $265 price target. The firm opined that it sees an attractive opportunity to enter the name as bioprocessing recovery is continually materializing. Danaher Corporation (NYSE:DHR) is the fourth best medical stock to buy according to billionaires. Madison Sustainable Equity Fund was also bullish on the company, and stated the following regarding Danaher Corporation (NYSE:DHR) in its Q3 2024 investor letter:
“Danaher Corporation (NYSE:DHR) released its 2024 Corporate Sustainability Report. It highlighted several milestones across its three pillars of sustainability (building the best team, innovating products that improve lives and the planet, and protecting the environment). The company has committed to setting greenhouse gas emission reduction targets in line with the Science Based Targets initiatives (SBTi), including reaching net-zero value chain emissions by 2050.”
3. Intuitive Surgical, Inc. (NASDAQ:ISRG)
Number of Billionaire Investors: 18
Number of Hedge Fund Holders: 95
Intuitive Surgical, Inc. (NASDAQ:ISRG) has an elaborate ecosystem of services and products that provides robotic-assisted surgical solutions and invasive care. Its products include the Ion Endoluminal and the Da Vinci Surgical systems. In 2024, Intuitive Surgical, Inc. (NASDAQ:ISRG) expanded its installed system base to 9,902, reflecting a 15% growth. It also grew its number of performed procedures by 17%, showing its technology’s global adoption.
Its fiscal Q4 2024 results also showed considerable growth, with Da Vinci procedures increasing by 18%. Overall revenue also increased by 25% to $2.41 billion, beating the consensus of $2.24 billion. Intuitive Surgical, Inc. (NASDAQ:ISRG) holds a significant position in the surgical robotics market. According to Grand View Research, the surgical robotics market is expected to grow at a compound annual growth rate of 9.5% until 2030. The global market is anticipated to be worth around $7.4 billion by then, up from $4.3 billion last year. The market holds potential for growth in the coming years and decades, supported by the rapid advancement of healthcare technologies.
Intuitive Surgical, Inc.’s (NASDAQ:ISRG) management has expressed optimism for 2025, expecting a 13%-16% growth in worldwide da Vinci procedures. In a report released on April 2, Patrick Wood from Morgan Stanley maintained a Buy rating on Intuitive Surgical, Inc. (NASDAQ:ISRG) and set a price target of $650.00. The firm said that growth in the company’s general surgery segment is more diversified than expected, which presents an attractive entry point for investors in conjunction with the recent stock pullback. The company takes the third spot on our list of the best medical stocks to buy now.
2. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Billionaire Investors: 23
Number of Hedge Fund Holders: 150
UnitedHealth Group Incorporated (NYSE:UNH) provides healthcare coverage, data consultancy, and software services. It operates through the OptumRx, OptumInsight, OptumHealth, and UnitedHealthCare segments, which have solid operations. UnitedHealthcare, its insurance division, added millions of customers during fiscal 2024 and is continuing to expand its operations. Its OptumHealth division grew revenues to around $105 billion in fiscal 2024 and is expected to touch $117 billion in fiscal 2025.
UnitedHealth Group Incorporated (NYSE:UNH) also employed around $17 billion in growth capital in fiscal 2024 to strengthen its capabilities and returned over $16 billion to shareholders through share repurchases and dividends. UnitedHealth Group Incorporated (NYSE:UNH) expects cash flow from operations to reach $33 billion in fiscal 2025, or 1.2 times net income.
On April 9, Mizuho analyst Ann Hynes raised the firm’s price target on UnitedHealth Group Incorporated (NYSE:UNH) to $650 from $600 and kept an Outperform rating on the shares. The company takes the second spot on our list of the best medical stocks to invest in now.
Vulcan Value Partners stated the following regarding UnitedHealth Group Incorporated (NYSE:UNH) in its Q4 2024 investor letter:
“UnitedHealth Group Incorporated (NYSE:UNH), a company that we have owned several times in the past, is the largest health insurer in the United States. UnitedHealth Group also owns Optum, which is a rapidly growing healthcare services company. The environment for the health insurance business remains positive as growth in healthcare spending, driven by chronic diseases and an aging population, will continue to outpace overall economic growth. The insurance business benefits from powerful network effects as more members attract more providers and vice versa, which reinforces United’s value proposition and bargaining power with each side of the network. We respect UnitedHealth Group’s management team and have been very pleased with their long-term vision and execution.”
1. Eli Lilly and Company (NYSE:LLY)
Number of Billionaire Investors: 23
Number of Hedge Fund Holders: 115
Eli Lilly and Company (NYSE:LLY) develops, manufactures, discovers, and sells pharmaceutical products. These products span oncology, diabetes, immunology, neuroscience, and other therapies. Investors are bullish on Eli Lilly and Company (NYSE:LLY) due to its in-demand GLP-1 drugs, used to treat diabetes and obesity, which are still in their early growth stages, and the company’s strong financials.
The company has strong operations. It reported a 32% revenue growth in fiscal 2024 compared to fiscal 2023, exceeding its first-time guidance by $4 billion. Eli Lilly and Company (NYSE:LLY) also made substantial progress across its strategic deliverables in fiscal Q4 2024, with revenue growing by 45% in the quarter, supported by strong uptake of its Mounjaro and Zepbound drugs.
On February 10, the company announced a collaboration with AdvanCell to advance cancer treatment through targeted alpha therapies. By combining Eli Lilly and Company’s (NYSE:LLY) expertise in drug manufacturing with AdvanCell’s Pb-212 production technology and infrastructure, the collaboration aims to expedite clinical progress for innovative radiopharmaceuticals. This is expected to be a significant opportunity for the company to further strengthen its cancer treatment portfolio and explore Pb-212-based therapies.
In a report released on April 9, Tim Anderson from Bank of America Securities maintained a Buy rating on Eli Lilly and Company (NYSE:LLY). Its median price target of $736.93 implies an upside of 37.73% from current levels. Aristotle Atlantic Partners, LLC highlighted LLY in its Q4 2024 investor letter. Here is what the firm has to say:
“Eli Lilly and Company (NYSE:LLY) contributed to performance in the fourth quarter. While shares underperformed, our underweight position versus the benchmark resulted in a positive contribution to relative returns. Lilly shares were weak following an uncharacteristic third-quarter earnings miss driven by softer-than-expected sales of its blockbuster diabetes and obesity drugs. The company blamed this partly on wholesaler destocking. Lilly reinforced its view that end demand for the drugs remains strong”.
Overall, LLY ranks first among the 10 best medical stocks to buy according to billionaires. While we acknowledge the potential of medical stocks, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than LLY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
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