In this article, we will be taking a look at the 8 most undervalued healthcare stocks to buy according to analysts.
Rising Healthcare Costs and the Impact of Tariffs on US-China Trade in the Healthcare Sector
Healthcare prices and expenditures have been rising in the United States. Healthcare spending in the United States climbed 7.5% from 2022 to $4.9 trillion in 2023, according to the Centers for Medicare & Medicaid Services. The healthcare sector accounted for 17.6% of the US economy in 2023, up 17.4% from 2022. The two primary drivers of this rise are the expansion of private health insurance and Medicare.
As more and more US companies look to China for deals on the next promising chemical, whether in the obesity or cancer area, the effect of tariffs on this ongoing trend has become a major point of dispute in the healthcare business. On February 7, Carlo Rizzuto, managing director of Versant Ventures, discussed how tariffs affect healthcare on CNBC’s “Fast Money.” According to Rizzuto, tariffs could have two effects on the industry. The first would be goods created in China and released into the US or other markets. To understand how tariffs might affect such trade operations, the industry would need to observe how the tariffs are implemented in the market.
Second, and more specifically, China serves as a major base for contract production and research in the US healthcare sector. Therefore, anything that increases that cost is likely to make the market more challenging. The management of the healthcare industry, which is already under pressure from investors, will not be improved by cost increases.
Impact of China on Healthcare R&D and the Growing Potential of Undervalued Healthcare Stocks
The great majority of healthcare organizations use a Chinese CRO or manufacturing partner in some capacity during the research and development phase, according to Rizzuto, who discussed China’s significant influence in the pharmaceutical and healthcare industries. It, therefore, has a significant impact on how pharmaceutical and biotech businesses operate in the country. This pattern is quite frequent across all sizes of enterprises.
Simply said, healthcare companies are unable to reshore all of their externalized R&D and production to the United States due to the absence of the infrastructure necessary to manage the transfer. As a result, it is difficult to see how such a massive reshoring might take place. The costs to attain this goal can be calculated linearly with the number of tariffs implemented.
McKinsey projects that healthcare EBITDA will increase at a 7% CAGR from a baseline of $676 billion in 2023 to $987 billion in 2028. While growth is expected to be faster in some sectors (such as specialty pharmacy and HST), recovery from post-pandemic lows is expected to promote improvement in several categories. Because they enable payers and providers to function more efficiently in a complex environment, software platforms are vital to the healthcare ecosystem.
Technological innovation (such as generative AI and machine learning) continues to offer opportunities for stakeholders from all sectors by automating processes, promoting data connectivity, and generating actionable insights. Specialty pharmacy revenue is expected to expand significantly because of higher utilization and pipeline extension (as in cancer), according to McKinsey. The increased usage of specialty drugs is contributing to the continued growth of specialty pharmacy profit pools.
With this in mind, we will now have a look at the 8 Most Undervalued Healthcare Stocks To Buy According To Analysts.
A healthcare professional examining an X-ray of a patient with a serious cardiovascular disease.
Our Methodology
For our methodology, we used a screener to filter healthcare stocks with a forward PE ratio of less than 15 and an analyst upside of over 20%. We then ranked the stocks based on the analyst upside as of March 30th, 2025.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Here is our list of the 8 most undervalued healthcare stocks to buy according to analysts.
8. Teva Pharmaceutical Industries Limited (NYSE:TEVA)
Price Target Upside: 24%
Teva Pharmaceutical Industries Limited (NYSE:TEVA) is a global leader in the pharmaceutical industry that is primarily focused on generic drugs. The company is the biggest producer of generic drugs, with more than 3,500 items in a variety of therapeutic categories. Developing, producing, and distributing both generic and specialty medications globally are all part of the company’s business plan. The corporation produces 76 billion tablets and capsules a year and touches about 200 million people every day in North America, Europe, and other regions.
Teva Pharmaceutical Industries Limited (NYSE:TEVA) made significant strides in 2024, which aided in its expansion and financial stability. Its revenue growth was driven by key items like AUSTEDO, UZEDY, and AJOVY, with AJOVY expanding by 18%, UZEDY exceeding its sales goal, and AUSTEDO witnessing a 34% rise in sales.
The inventive pipeline of the company is encouraging; late-stage drugs, including Olanzapine, Duvakitug, and ICS/SABA DARI, are making headway in clinical trials, increasing the company’s potential for future expansion. While the corporation’s API business expanded modestly, the generics business also saw good performance, which was driven by enhanced product launches and operational efficiencies. Given its strong growth and solid financials, Teva is often considered one of the most undervalued stocks in the healthcare sector, presenting a potential opportunity for investors.
Teva Pharmaceutical Industries Limited (NYSE:TEVA) announced $16.5 billion in revenue for the fourth quarter of 2024, which is a 9% year-over-year gain. Its adjusted EBITDA also increased by 9%, and its non-GAAP EPS increased by 10%. This expansion included all business areas, including APIs, generics, and new products. Strong revenue performance combined with efficient expense control is reflected in the total profitability improvement.
7. Fresenius Medical Care AG (NYSE:FMS)
Price Target Upside: 25%
Fresenius Medical Care AG (NYSE:FMS) provides dialysis products and services and offers care for patients with chronic kidney disease. In addition to running outpatient dialysis clinics and offering home dialysis assistance, it also develops and distributes necessary dialysis supplies and medications. Additionally, it provides associated medical services like renal medicines and vascular care.
Fresenius Medical Care AG (NYSE:FMS)’s turnaround in 2024 was aided by the Care Delivery division, which exceeded the 10% target with an operating income margin of 10.7%. Positive pricing and volume effects, increased productivity, improved labor efficiency, and a targeted foreign portfolio were the causes of this. In Q4 2024, US same-market treatment growth reached 0.5%, turning positive for the whole year. In Q3 and Q4, the segment reduced weather-related impacts to a mere 0.05%.
The corporation anticipates that the introduction of the 5008X hemodiafiltration machine will propel positive treatment growth in the US market beyond 0.5% in 2025. This cutting-edge medical technology removes waste from the blood during dialysis. When compared to conventional hemodialysis, it provides better treatment efficiency. The value-based care industry is predicted to generate an additional €100 million in revenue, reaching €1.9 billion by 2025, further solidifying its position among the most undervalued stocks in the sector.
Ariel Global Fund sees the market’s fear regarding GLP-1 drugs impacting dialysis demand as overblown. The fund thinks this presents a buying opportunity for Fresenius Medical Care AG (NYSE:FMS) and stated the following in its fourth quarter 2023 investor letter:
“We added positions in, leading providers of dialysis services, DaVita, Inc. and Fresenius Medical Care AG (NYSE:FMS). Fresenius Medical Care AG & Co. is the worldwide leader in the treatment of renal disease, while Davita, Inc. administers its services to over 2,700 outpatient dialysis centers across 45+ states and operates over 350 outpatient dialysis centers in 12 total countries. The shares of each company came under pressure following the release of clinical data on the efficacy of glucagon-like-peptide-1 (GLP-1) weight-loss drugs and their potential to negatively impact the demand for dialysis, providing us with attractive entry points in both names. Even assuming high rates of both uptake and effectiveness, we believe the overall impact on dialysis volumes will be small in the near-to-medium term. We also think the cardioprotective effects of the GLP-1 class may enable patients to live longer, thereby increasing the overall size of the end-stage renal disease incidence pool. We believe the market misunderstood the actual long-term clinical impact on dialysis and were able to purchase at attractive valuation levels.”
6. Smith & Nephew Plc (NYSE:SNN)
Price Target Upside: 27%
Smith & Nephew plc (NYSE:SNN) is a global medical technology company specializing in orthopedic reconstruction, sports medicine, and advanced wound care solutions. The company stands out for its commitment to innovation, investing in research and development to create cutting-edge technologies like robotic-assisted surgical systems, advanced biomaterials, and digital health platforms. Recent innovations, such as the CORI Digital Tensioner for knee procedures and advanced hip systems, enhance surgical precision and improve patient outcomes.
Smith & Nephew plc (NYSE:SNN) reported strong Q4 2024 and full-year results, which were fueled by its 12-Point Plan for operational transformation. Its Q4 revenue reached $1.57 billion, reflecting a 7.8% increase, while full-year revenue totaled $5.8 billion, with a 5.3% growth rate. New product launches contributed over 60% to this growth.
The company’s profitability saw significant gains, with operating profit surging 54.6% to $657 million. Trading profit rose by 8.2%, reaching over $1 billion, and trading profit margin increased to 18.1%, up from 17.5% in 2023. Cash flow also improved, with operational cash growing 50.2% to $1.24 billion and free cash flow increasing by 327.1% to $551 million.
Smith & Nephew plc (NYSE:SNN)’s earnings per share (EPS) jumped 56.3% to 47.2 cents, while adjusted EPS rose slightly to 84.3 cents. The company’s strong performance was driven by operational efficiency, better product availability, and successful commercialization, despite challenges like inflation and issues in China.
Looking ahead, the business expects revenue growth of around 5% in 2025, with trading profit margins projected between 19–20%. Continued operational savings are expected to further boost margins beyond 2025.
5. Pfizer Inc. (NYSE:PFE)
Price Target Upside: 31.92%
Pfizer Inc. (NYSE:PFE) stands fifth on our list of the most undervalued stocks. It is a global biopharmaceutical company that manufactures, develops, markets, and sells biopharmaceutical products worldwide. In developing and emerging markets, it promotes wellness, prevention, treatment, and cures. The company wants to become a leading cancer organization in the world. With intentions to keep improving over the next ten years, it is currently the third-largest biopharma firm in the US for cancer.
With a dividend yield of 6.3%, Pfizer Inc. (NYSE:PFE) outperforms the majority of blue-chip stocks. Its management recently announced a 2.4% increase in early December, reaffirming its intention to support and grow this dividend on a recurrent basis.
Pfizer Inc. (NYSE:PFE) is concentrating on its oncology pipeline for future growth with the addition of multiple new blockbuster medications to its portfolio as part of its 2030 targets. It is anticipated that the business would keep searching for chances to buy out promising pharmaceutical firms in order to expand its pipeline. It spent a large amount of its pandemic profits on the $43 billion purchase of the oncology-focused biotech startup Seagen.
The company is seeing good results from this approach, as management projects earnings growth of 10% to 18% in 2025. Additionally, analysts predict that over the next three to five years, the company’s earnings will increase by about 14% yearly.
4. Baxter International Inc. (NYSE:BAX)
Price Target Upside: 38.56%
Baxter International Inc. (NYSE:BAX), founded in 1931 and headquartered in Deerfield, Illinois, is a leading healthcare company that specializes in medical products and technologies for chronic and acute conditions. The company offers a diverse range of products, including intravenous solutions, infusion pumps, anesthetics, and digital health platforms. The corporation’s business model spans three segments: Medical Products and Therapies, Healthcare Systems and Technologies, and Pharmaceuticals. Baxter International Inc. (NYSE:BAX) also enhances its portfolio and global reach through strategic acquisitions, such as its purchase of Hillrom.
The business’s Q4 2024 financial report which was released on February 20, 2025, highlighted solid sales growth and strategic developments. Its worldwide sales from continuing operations reached $2.75 billion, which is a 1% increase on a reported basis, exceeding prior guidance. U.S. sales remained flat at $1.51 billion, while international sales rose 1% as reported and 3% at constant currency, totaling $1.24 billion.
Baxter International Inc. (NYSE:BAX)’s full-year sales for 2024 reached $10.64 billion, marking a 3% increase, also surpassing guidance. The revenue boost was driven by strong performances in the company’s Medical Products & Therapies and Pharmaceuticals segments, including notable sales of Novum IQ infusion pumps and specialty injectables. However, the U.S. GAAP diluted EPS showed a loss of $0.95, which was impacted by goodwill impairment and business optimization costs, though adjusted EPS from continuing operations of $0.58 exceeded expectations.
Additionally, Baxter International Inc. (NYSE:BAX) completed the sale of its Kidney Care business to Carlyle for $3.4 billion, marking a strategic divestiture. The company also demonstrated resilience and successfully recovered its North Cove manufacturing site after Hurricane Helene, ensuring continuity in supply, which is a key factor in why it remains one of the most undervalued stocks with strong growth potential.
3. Genmab A/S (NASDAQ:GMAB)
Price Target Upside: 40%
Genmab A/S (NASDAQ:GMAB) develops innovative antibody-based therapies for cancer and other serious diseases. It is developing ground-breaking medicines in oncology and other fields with a portfolio of commercialized medications that includes EPKINLY, TEPKINLY, and Tivdak, as well as a strong pipeline that includes Epcoritamab and tisotumab vedotin.
The main sources of Genmab A/S (NASDAQ:GMAB)’s income are its marketed medications, especially EPKINLY and TIVDAK. Strong adoption in the US and Japan helped the company’s EPKINLY reach $281 million in sales in 2024, including $78 million in Q4 alone. By the end of 2026, three crucial Phase 3 readouts are anticipated, and its potential peak sales are projected to surpass $3 billion. TIVDAK is the world standard of therapy for advanced cervical cancer, with sales of $131 million in 2024, including $38 million in Q4. In 2025, approvals are expected in Europe and Japan.
As Genmab A/S (NASDAQ:GMAB)’s revenue continues to climb, analysts recognize its significant long-term growth potential, placing it among the most undervalued stocks in the biotech sector. Sales of EPKINLY and TIVDAK are a significant part of the recurring revenues, which make up 95% of the total projected revenue, and they are responsible for 34% of the company’s anticipated revenue increase in 2025. In total, the marketed medicines category accounted for 29% of the company’s 2024 revenue increase.
2. Royalty Pharma Plc (NASDAQ:RPRX)
Price Target Upside: 41.60%
Royalty Pharma Plc (NASDAQ:RPRX) is a funder of innovation in the biopharmaceutical industry and a buyer of biopharmaceutical royalties. Through small and mid-cap biotech firms to multinational pharmaceutical companies, it works with innovators from academic institutions, research hospitals, and non-profits. By working with businesses to co-fund late-stage clinical studies and new product launches in exchange for future royalties, the company directly funds industry innovation. In addition, it indirectly funds innovation by purchasing current royalties from the original creators. The portfolio of Royalty Pharma Plc (NASDAQ:RPRX) comprises royalties in more than 35 marketed drugs, such as Pfizer’s Nurtec ODT, Novartis’ Promacta, AbbVie and Johnson & Johnson’s Imbruvica, and Johnson & Johnson’s Tremfya.
At the upper end of its guidance range, the company’s fiscal year 2024 portfolio receipts came to $2.8 billion. This represents a 13% increase, much beyond its original forecast of 5% to 9%. Royalty Pharma Plc (NASDAQ:RPRX) anticipates $2.9 billion to $3.05 billion in portfolio receipts in 2025. Its portfolio now includes four development space treatments and royalties on AD medication.
The FDA has approved Tremfya for ulcerative colitis, Cobenfy for schizophrenia, and Voranigo for brain cancer, among other favorable developments for the company’s portfolio. In addition to $230 million for share repurchases, it invested $2.8 billion to expand its holdings. A fresh $3 billion share repurchase plan was recently approved by its Board, and the business plans to buy back $2 billion of its shares in 2025.
Patient Capital Opportunity Equity Strategy stated the following regarding Royalty Pharma plc (NASDAQ:RPRX) in its Q2 2024 investor letter:
“While Royalty Pharma plc (NASDAQ:RPRX) is in the healthcare space, it is more like an investment firm that buys royalty assets in the healthcare space. The company has an extremely strong track record, running the business for over 20 years as a private fund before bringing it public. The market opportunity for external royalty funding has only grown as early-stage start-ups need funding and legacy players are looking to lower their debt levels. We think Royalty Pharma is perfectly positioned as the partner of choice. The company is disciplined, maintaining deal internal rate of returns (IRRs) in the low-teens despite the higher interest rate environment. We think as the company continues to deliver as a public company, the market will start paying attention.”
1. GSK plc (NYSE:GSK)
Price Target Upside: 47%
GSK plc (NYSE:GSK) tops our list for being one of the most undervalued stocks. The company was formerly known as GlaxoSmithKline and is a multinational biopharmaceutical and healthcare company that creates and markets a variety of consumer health products, drugs, and vaccines. With more than 20 vaccinations under its belt, this UK-based company is a leader in immunology, respiratory treatments, and vaccines. Additionally, the business creates cancer treatments.
For fiscal Q4 2024, GSK plc (NYSE:GSK) released impressive financial results that showed a robust increase in all important parameters. In 2024, its core operating profit increased by 13%, while its sales increased by 8% to nearly £31 billion. Core profits per share (EPS) increased by 12% as well.
The company’s Specialty Medicines business saw a 19% increase in sales, which was credited with this success. Its oncology revenues almost doubled to over £1.4 billion in 2024, while its HIV sales increased by 13%. With five new product approvals expected in 2025 and 11 successful phase III studies reported in 2024, GSK plc (NYSE:GSK) is steadily bolstering its pipeline. These include depemokimab for severe asthma and Blenrep for multiple myeloma.
Overall, GSK plc (NYSE:GSK) ranks first among the 8 most undervalued healthcare stocks to buy according to analysts. While we acknowledge the potential of healthcare companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than GSK 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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