In this article, we will discuss the 12 Best Healthcare Stocks to Buy According to Analysts.
McKinsey reported that, since 2019, the US healthcare industry witnessed significant financial pressure. This is evidenced by the fact that industry EBITDA as a proportion of the National Health Expenditure has declined by an estimated 150 bps (basis points). This fall has impacted payers and providers. Notably, the payers’ estimated margins in 2024 might be at their lowest levels in a decade. While providers have been facing labor shortages, the inflationary pressures have not yet been fully absorbed in the broader healthcare system.
Amidst these past trends, what does the future hold?
What Lies Ahead for the US Healthcare Industry?
McKinsey believes that the healthcare players need to consider potential policy and regulatory changes that can take place in the coming years due to the 2025 change in federal government administration. Furthermore, the industry continues to undergo a shift in growth dynamics. Health services and technology (HST) revenue pools are projected to increase at an 8% CAGR from 2023 to 2028, courtesy of the double-digit growth in software platforms and advanced data and analytics via sales of innovative technologies (such as generative AI) to providers and payers.
Furthermore, pharmacy services can see continued growth, mainly those having a focus on specialty pharmacy. Growth is expected to be fueled by increased utilization and new therapy launches, says McKinsey. Notably, specialty pharmacy revenue is projected to rise at an 8% CAGR from 2023 to 2028, boosting EBITDA for specialty pharmacies and managed service providers.
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Growth Drivers in the Healthcare Industry
McKinsey estimates that healthcare EBITDA is expected to increase by 7% CAGR to $987 billion in 2028 from a baseline of $676 billion in 2023. In many segments, the improvement is expected to be backed by recovery from post-pandemic lows, while in other areas (such as HST and specialty pharmacy), growth is projected to be faster. Software platforms have a key role in the healthcare ecosystem, allowing providers and payers to be more efficient in a complex environment.
Technological innovation (such as generative AI and machine learning) continues to create opportunities for stakeholders throughout segments via automating workflows, promoting data connectivity, and generating actionable insights. McKinsey further added that specialty pharmacy revenue is expected to experience rapid growth because of higher utilization and pipeline expansion (such as in oncology). The increased use of specialty drugs continues to expand specialty pharmacy profit pools.
With this in mind, we will now have a look at the 12 Best Healthcare Stocks to Buy According to Analysts
A healthcare professional wearing a lab coat, holding a vial of medication.
Our Methodology
To list the 12 Best Healthcare Stocks to Buy According to Analysts, we used a screener and filtered out the companies catering to the healthcare sector. Next, we chose the stocks that analysts saw the most upside to. Finally, the stocks were arranged in ascending order of their average upside potential, as of February 4. We also mentioned hedge fund sentiments around each stock, as of Q3 2024.
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12 Best Healthcare Stocks to Buy According to Analysts
12) BridgeBio Pharma, Inc. (NASDAQ:BBIO)
Number of Hedge Fund Holders: 46
Average Upside Potential: 43.9%
BridgeBio Pharma, Inc. (NASDAQ:BBIO) is a commercial-stage biopharmaceutical company, engaged in discovering, creating, testing, and delivering transformative medicines to treat patients suffering from genetic diseases and cancers. On January 14, TD Cowen analyst Tyler Van Buren maintained a bullish stance on the company’s stock, giving a “Buy” rating. The analyst’s optimism revolves around several factors, including the promising initial launch performance of BridgeBio Pharma, Inc. (NASDAQ:BBIO)’s product, Attruby.
The analyst believes that the robust sales potential and market reception of Attruby are expected to help BridgeBio Pharma, Inc. (NASDAQ:BBIO). On November 22, 2024, the US FDA approved Attruby (acoramidis), and since then, the company has seen strong momentum with 430 patient prescriptions written by 248 physicians. Elsewhere, BofA increased the company’s price objective to $45 from $42, maintaining a “Buy” rating after the FDA approval.
BridgeBio Pharma, Inc. (NASDAQ:BBIO) has also showcased a proactive approach to maximizing the value of its assets with the help of strategic partnerships and ventures. The company has debuted its newest venture—GondolaBio, a biopharma startup. It will focus on developing therapies for genetic and rare diseases.
11) BioMarin Pharmaceutical Inc. (NASDAQ:BMRN)
Number of Hedge Fund Holders: 54
Average Upside Potential: 46.3%
BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) is engaged in the development and commercialization of therapies for people suffering from serious and life-threatening rare diseases and medical conditions. JPMorgan reiterated an “Overweight” rating on the company’s stock, providing a price target of $109 after the company’s presentation at the JPMorgan Healthcare Conference. The presentation revolved around key goals from a commercial and clinical perspective. As per the analyst, BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) reiterated achieving ~$4 billion in total revenue in 2027 and a low-to-mid 40% adjusted operating margin, starting with 40% in 2026.
JPMorgan believes that the company’s stock is undervalued at current levels, possessing a durable base business and potential for strong operating margin expansion over the upcoming few years. VOXZOGO, BioMarin Pharmaceutical Inc. (NASDAQ:BMRN)’s treatment for achondroplasia, remains a standout performer in its portfolio. Since supply constraints are now resolved, there is healthy potential for strong growth and label expansion.
BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) highlighted strong global demand for VOXZOGO, resulting in more than 3,800 infants and children receiving treatment at the end of Q3 2024. In the US, the majority of new patient starts in Q3 2024 were for children below 5 years of age, implying healthy adoption from families who seek VOXZOGO therapy for their infants and young children.
10) Summit Therapeutics Inc. (NASDAQ:SMMT)
Number of Hedge Fund Holders: 21
Average Upside Potential: 52.7%
Summit Therapeutics Inc. (NASDAQ:SMMT) is a biopharmaceutical company, that focuses on the discovery, development, and commercialization of patient, physician, caregiver, and societal-friendly medicinal therapies. Analyst Mitchell Kapoor of H.C. Wainwright reiterated a “Buy” rating on the company’s shares, which stems from several factors revolving around the strong outlook of the company’s key drug candidate, ivonescimab. Elsewhere, Truist initiated coverage of Summit Therapeutics Inc. (NASDAQ:SMMT)’s stock, offering a “Buy” rating and a price target of $35.
As per Truist’s analyst, ivonescimab remains the most clinically advanced asset in a novel class of drugs, which can surpass the most successful drug class in oncology. While lung cancer demonstrates a strong market opportunity, the total addressable market for ivonescimab is much broader. Furthermore, Truist analyst Asthika Goonewardene predicts that ivonescimab might be available in the US and Europe in early 2026.
Additionally, the analyst believes that ivonescimab can garner annual sales in the double-digit billions. Summit Therapeutics Inc. (NASDAQ:SMMT)’s aggregate cash and cash equivalents and short-term investments came in at ~$487 million and $186.2 million at September 30, 2024 and December 31, 2023, respectively. In September 2024, Summit Therapeutics Inc. (NASDAQ:SMMT) also closed a private financing of $235 million with multiple leading biotech institutional investors and insiders, strengthening its cash balance to extend the runway.
9) Cytokinetics, Incorporated (NASDAQ:CYTK)
Number of Hedge Fund Holders: 61
Average Upside Potential: 64.6%
Cytokinetics, Incorporated (NASDAQ:CYTK) is a late-stage biopharmaceutical company, which focuses on discovering, developing, and commercializing muscle activators and inhibitors as potential treatments for debilitating diseases. Leerink Partners analyst Roanna Ruiz has maintained a bullish stance on the company’s stock, offering a “Buy” rating. The rating stems from factors including Cytokinetics, Incorporated (NASDAQ:CYTK)’s strategic plans and financial stability. The company recently announced its ‘Vision 2030’ plan, articulating a strong 5-year roadmap focusing on significantly enhancing both immediate and future value.
Notably, a key component of these plans is the expected FDA approval and commercial launch of aficamten (afi), a leading asset, in 2025, which can strengthen Cytokinetics, Incorporated (NASDAQ:CYTK)’s position in the hypertrophic cardiomyopathy (HCM) market. Furthermore, the company seems to be well-positioned financially, with ~$1.3 billion in cash and cash equivalents and investments as of September 30, 2024, aiding the execution of its commercial strategies and pipeline development. The analyst believes that ongoing and upcoming clinical trials throughout various programs support a promising pipeline, further justifying a “Buy” rating for Cytokinetics, Incorporated (NASDAQ:CYTK).
In 2025, Cytokinetics, Incorporated (NASDAQ:CYTK) focuses on continuing the go-to-market plans for aficamten in Germany and expanding commercial readiness activities in Europe in 2025, in preparation for expected approval by the European Medicines Agency (EMA) in H1 2026.
8) Revolution Medicines, Inc. (NASDAQ:RVMD)
Number of Hedge Fund Holders: 44
Average Upside Potential: 64.9%
Revolution Medicines, Inc. (NASDAQ:RVMD) is a clinical-stage precision oncology company, engaged in developing novel targeted therapies for RAS-addicted cancers. Analyst Eric Joseph of J.P. Morgan maintained a “Buy” rating on the company’s shares, boosting the price objective to $71.00. Joseph’s rating stems from a combination of factors pointing to the promising potential for the company. Notably, Revolution Medicines, Inc. (NASDAQ:RVMD)’s recent data update on its RAS(ON) pipeline resulted in increased success assumptions, mainly for its RMC-6236 drug in second and first-line non-small cell lung cancer (NSCLC) opportunities.
Furthermore, an increase in the price target is because of the derisking of ongoing clinical trials and the expectation of a robust commercial path for RMC-6236 as a standard of care in pancreatic ductal adenocarcinoma. While Revolution Medicines, Inc. (NASDAQ:RVMD) continues to face competition, its focus on RAS inhibitors and its differentiated safety profile for some of its drug candidates have placed it well in the industry. Given Revolution Medicines, Inc. (NASDAQ:RVMD)’s current operating plan, it expects current cash, cash equivalents, and marketable securities to finance planned operations into 2027. As of September 30, 2024, the company reported having $1.54 billion in cash, cash equivalents and marketable securities.
7) Moderna, Inc. (NASDAQ:MRNA)
Number of Hedge Fund Holders: 34
Average Upside Potential: 72.6%
Moderna, Inc. (NASDAQ:MRNA) is a biotechnology company, which is engaged in discovering, developing, and commercializing messenger RNA therapeutics and vaccines for the treatment of infectious diseases, immuno-oncology, rare diseases, autoimmune, and cardiovascular diseases. Moderna, Inc. (NASDAQ:MRNA)’s shares came under the investors’ radar after Oracle Chairman Larry Ellison discussed the transformative potential of AI in healthcare during a meeting at the White House. Ellison highlighted that AI can revolutionize cancer detection, treatment, and vaccine development, resulting in groundbreaking capabilities.
Ellison also claimed that through the use of AI, a messenger RNA-based vaccine can be produced robotically in just 48 hours. Notably, Moderna, Inc. (NASDAQ:MRNA) is utilizing its mRNA technology to develop a cancer vaccine in partnership with Merck. Furthermore, the success of cancer vaccines provides a transformative opportunity for Moderna, Inc. (NASDAQ:MRNA). The company’s diverse pipeline, spanning respiratory vaccines, cancer therapeutics, and rare disease treatments, is expected to result in significant long-term revenue potential.
The mRNA platform’s versatility enables for rapid development and adaptation of new therapies, catering to a wide range of medical needs. Moderna, Inc. (NASDAQ:MRNA) operates as a tech-driven platform, using its innovative mRNA technology to ramp up drug development, scale production, and achieve increased margins.
6) Sarepta Therapeutics, Inc. (NASDAQ:SRPT)
Number of Hedge Fund Holders: 50
Average Upside Potential: 74%
Sarepta Therapeutics, Inc. (NASDAQ:SRPT) is a commercial-stage biopharmaceutical company that focuses on the discovery and development of RNA-targeted therapeutics, gene therapies, and other genetic therapeutic modalities for the treatment of rare diseases. Analyst Gil Blum from Needham maintained a “Buy” rating, maintaining the price target at $202.00. The rating is backed by a combination of factors revolving around positive outcomes from Sarepta Therapeutics, Inc. (NASDAQ:SRPT)’s EMBARK study. Notably, the 2-year results from the study exhibited significant improvements throughout various measures of Duchenne muscular dystrophy (DMD), reflecting the potential of ELEVIDYS as a treatment.
Furthermore, the data showcased that older patients in a crossover group witnessed functional gains as compared to younger patients in the original study cohort, implying broad clinical benefit. Notably, Sarepta Therapeutics, Inc. (NASDAQ:SRPT)’s FDA-approved gene therapy, ELEVIDYS, supports the company’s significant moat, placing the company in a leadership position in muscle dystrophy treatments. In Q4 2024, the company grew total net product revenue by 75% YoY and grew ELEVIDYS by a strong 112% over the prior sequential quarter.
Sarepta Therapeutics, Inc. (NASDAQ:SRPT)’s total net product revenue came in at $638.2 million for Q4 2024 and $1.79 billion for FY 2024, surpassing the full-year guidance by more than $100 million. The company reiterated its 2025 full-year total net product revenue guidance of $2.9 billion – $3.1 billion.
5) Biogen Inc. (NASDAQ:BIIB)
Number of Hedge Fund Holders: 49
Average Upside Potential: 75.4%
Biogen Inc. (NASDAQ:BIIB) discovers, develops, manufactures, and delivers therapies for treating neurological and neurodegenerative diseases. Oppenheimer reiterated its “Outperform” rating and a price target of $255.00 on the company’s shares. Biogen Inc. (NASDAQ:BIIB)’s commercial strategies are expected to enhance the uptake of Leqembi. Furthermore, the company continues to focus on its pipeline, with expected regulatory filings and late-stage trial results supporting product launches post-2027. Oppenheimer also noted the company’s disciplined approach to capital allocation, which is expected to result in operating margin expansion.
The firm’s views underscore Biogen Inc. (NASDAQ:BIIB)’s leadership position in Alzheimer’s Disease (AD) treatment, the potential for capital allocation, and the optionality offered by its pipeline. Furthermore, Oppenheimer lauded the multifaceted approach the company is adopting to maintain and grow its market position over the upcoming years. Biogen Inc. (NASDAQ:BIIB)’s focus on developing therapies for neurological and neurodegenerative diseases has placed it well as a critical player in the industry.
Despite challenges, Leqembi is expected to remain a significant opportunity for the company. Positive real-world experiences, together with manageable administration, are expected to fuel wider adoption. Patient Capital Management, a value investing firm, released its Q2 2024 investor letter. Here is what the fund said:
“Biogen Inc. (NASDAQ:BIIB) is another name that we believe is underappreciated. As a global biopharmaceutical business, the company is most well known for their products in multiple sclerosis, spinal muscular atrophy, and most recently Alzheimer’s disease. The new CEO, Christopher Viehbacher, is working to improve the company’s pipeline, most recently with their acquisition of Human Immunology Biosciences Inc. in May. Chris has a strong track record of successful M&A and we expect him to continue that tradition. More importantly, we think the market is currently giving the company no credit for success in their Alzheimer’s indication. While the uptake in Leqembi, their Alzheimer’s product, has been slow, we still see strong long-term potential for a patient population that is dramatically underserved. We find the risk/reward extremely attractive.”
4) Vaxcyte, Inc. (NASDAQ:PCVX)
Number of Hedge Fund Holders: 48
Average Upside Potential: 77.3%
Vaxcyte, Inc. (NASDAQ:PCVX) is a clinical-stage biotechnology vaccine company, engaged in developing novel protein vaccines to prevent or treat bacterial infectious diseases. Goldman Sachs analyst, Chris Shibutani, gave a new “Buy” rating on the company’s stock because of a combination of factors, such as strong clinical data for Vaxcyte, Inc. (NASDAQ:PCVX)’s leading programs, particularly VAX-31 in adults. The company’s proprietary technology platform remains critical in creating differentiated solutions in the pneumococcal vaccine market, where it targets to be a leading player.
As per the analyst, the platform has catered to traditional development challenges and demonstrated promising results. Furthermore, the analyst noted the potential for Vaxcyte, Inc. (NASDAQ:PCVX)’s pipeline to provide long-term growth by expanding the value proposition. Thanks to the company’s positive VAX-31 data, it has completed a follow-on equity offering, garnering $1.4 billion in net proceeds and strengthening its balance sheet.
Vaxcyte, Inc. (NASDAQ:PCVX) remains well-positioned to maintain continued positive momentum across its PCV (pneumococcal conjugate vaccine) franchise. TimesSquare Capital Management, an equity investment management company, released its Q3 2024 investor letter. Here is what the fund said:
“Vaxcyte, Inc. (NASDAQ:PCVX) (developer of vaccines) and Insmed Incorporated (developer of treatments for various pulmonary diseases). Vaxcyte’s lead pneumococcal vaccine candidate recently reported positive clinical data across a wider range of pneumonia types than current treatments. That created significant potential for Vaxcyte to take share within a multi-billion-dollar market, and we began to build a position.”
3) Genmab A/S (NASDAQ:GMAB)
Number of Hedge Fund Holders: 14
Average Upside Potential: 83.3%
Genmab A/S (NASDAQ:GMAB) develops antibody therapeutics for the treatment of cancer and other diseases. H.C. Wainwright analyst Ram Selvaraju reiterated a “Buy” rating on the company’s shares, setting a price target of $50.00. The rating is backed by a combination of factors including the consistent performance of the company’s DARZALEX, which achieved significant worldwide sales in line with anticipations. Notably, Genmab A/S (NASDAQ:GMAB) reported that net sales of DARZALEX in 2024 came in at US$11,670 million.
As per the analyst, the strong sales figures, mainly in the US market, underscore the franchise’s strong growth trajectory and reinforce confidence in the market positioning. The net trade sales came in at US$6,588 million in the US and US$5,082 million in the rest of the world. Genmab A/S (NASDAQ:GMAB)’s extensive pipeline, featuring candidates such as EPKINLY, and expertise in antibody design are expected to act as near- and medium-term clinical catalysts.
Genmab A/S (NASDAQ:GMAB) continues to operate in a highly competitive oncology market, where innovation and efficacy act as key differentiators. Its strength revolves around the proprietary antibody technology, which continues to yield multiple approved treatments. The company has updated the lower end of its revenue range of 2024 financial guidance due to the higher total royalty revenues from DARZALEX. Notably, it now expects revenue to be in the range of DKK21,100 million – DKK21,700 million, up from DKK20,500 million – DKK21,700 million.
2) Ionis Pharmaceuticals, Inc. (NASDAQ:IONS)
Number of Hedge Fund Holders: 44
Average Upside Potential: 85.4%
Ionis Pharmaceuticals, Inc. (NASDAQ:IONS) discovers and develops RNA-targeted therapeutics in the United States. David Lebowitz, an analyst from Citi, gave a “Buy” rating on the company’s shares, while the associated price target remains the same at $67.00. The rating stems from a combination of factors related to Ionis Pharmaceuticals, Inc. (NASDAQ:IONS)’s promising pipeline and upcoming catalysts. It has recently rolled out its first independently developed drug, TRYNGOLZA, after FDA approval, demonstrating a significant shift from its previous partnership model. The move demonstrates Ionis Pharmaceuticals, Inc. (NASDAQ:IONS)’s capability to commercialize its own products, which is anticipated to continue with the expected approval of donidalorsen in 2025.
To provide a brief context, TRYNGOLZA is the first-ever FDA-approved treatment that significantly and substantially reduces triglyceride levels in adults with FCS and offers clinically meaningful reduction in AP events when used with an appropriate diet (≤20 grams of fat per day). Furthermore, the analyst opines that the upcoming trials and data releases for candidates like pelacarsen, anticipated to enter a potentially large Lp(a) market, strengthen Ionis Pharmaceuticals, Inc. (NASDAQ:IONS)’s growth prospects.
The company executed an equity offering, extending Ionis Pharmaceuticals, Inc. (NASDAQ:IONS)’s cash runway, and enabling it to continue to invest in the numerous attractive opportunities. In September 2024, the company issued 11.5 million shares of its common stock, generating gross proceeds of $500 million. It plans to continue deploying its capital resources toward growth opportunities and expects to end 2024 with $2.2 billion in cash, cash equivalents, and short-term investments.
1) Legend Biotech Corporation (NASDAQ:LEGN)
Number of Hedge Fund Holders: 31
Average Upside Potential: 114.3%
Legend Biotech Corporation (NASDAQ:LEGN) is a clinical-stage biopharmaceutical company, that is engaged in the discovery, development, manufacturing, and commercialization of novel cell therapies for oncology and other indications. On January 23, BTIG analyst Justin Zelin maintained a “Buy” rating on the company’s stock, maintaining a price target of $91. The rating is backed by the company’s strong sales performance and strategic capacity expansions. In Q4 2024 and FY 2024, Legend Biotech Corporation (NASDAQ:LEGN), in partnership with JNJ, posted CARVYKTI® sales that marginally exceeded anticipations. Notably, the company announced that CARVYKTI® generated ~$334 million in net trade sales during the quarter ended December 31, 2024.
The performance was mainly aided by strong demand in the relapsed/refractory multiple myeloma setting and successful capacity expansions both in the US and internationally. Additionally, Legend Biotech Corporation (NASDAQ:LEGN)’s management articulated plans for additional manufacturing expansions to cater to future demand, strengthening the confidence in reaching production goals by 2025. Notably, CARVYKTI® remains a best-in-class therapy for multiple myeloma, showcasing strong efficacy and an improving safety profile.
Notably, the positive data from Legend Biotech Corporation (NASDAQ:LEGN)’s CARTITUDE-4 study further cemented its competitive position as CARVYKTI is the first and only cell therapy shown to significantly extend overall survival in comparison to standard therapies for multiple myeloma patients as early as second line.
While we acknowledge the potential of LEGN as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than LEGN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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