In this article, we will take a look at the most profitable healthcare stocks to buy.
By far, the healthcare sector remains among the most resilient and profitable in global equity markets. Most stocks in this sector not only offer long-term potential but also shield against macroeconomic headwinds.
Having said that, according to a publication by McKinsey & Company titled “What to expect in US healthcare in 2026 and beyond,” the healthcare system continues to experience financial pressure, while some opportunities persist. Published on January 12, the article notes that Industry EBITDA as a percentage of national health expenditures (NHE) dropped to 8.9% in 2024 from 11.2% in 2019. This trend is expected to worsen modestly in 2027, with industry EBITDA as a percentage of NHE forecasted to decline to 8.7%.
For 2028 and 2029, the authors expect robust results, backed by healthcare players’ efforts to strengthen their financial positions. Such initiatives include effective management of pricing and costs, strategic reallocation of resources to faster-growing segments, and engagement in mergers and acquisitions (M&A) and divestitures.
The article goes on to state that healthcare leaders should reconsider conventional models, enhance performance, and adopt technology to compete more effectively. That said, the authors project healthcare EBITDA annual growth of 5% for 2024-27, followed by 10% for 2027-29.
Keeping this outlook for the US healthcare industry in mind, we have compiled a list of the most profitable healthcare stocks to invest in.
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Our Methodology
To compile our list of the 10 most profitable healthcare stocks to buy, we used the Stock Analysis screener to filter for healthcare stocks with market capitalizations exceeding $2 billion that reported operating and net profit margins exceeding 20%. From this pool, we shortlisted the top 10 stocks with the highest trailing twelve-month (TTM) net income. These are then ranked in ascending order by net income. We also included data on hedge fund holdings in these companies based on Insider Monkey’s database, as of Q3 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 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
10. Zoetis Inc. (NYSE:ZTS)
Net Income (TTM): $2.65 billion
Operating Margin (TTM): 39.33%
Number of Hedge Fund holdings: 72
On January 15, Jonathan Block, an analyst at Stifel Nicolaus, reaffirmed a Hold rating and $130 price target on Zoetis Inc. (NYSE:ZTS). As the lowest 1-year price target among Wall Street analysts, the firm’s target translates to an upside potential of 4.91%.
Later, on January 22, Piper Sandler downgraded Zoetis Inc. (NYSE:ZTS) from Overweight to Neutral, while trimming the price target to $135, down from $190. Despite being bullish on the company’s long-term portfolio, the firm is not yet comfortable with projections over the upcoming years until more of the company’s innovations reach the market. That said, the company “is in an innovation air pocket that could last one to two years,” according to the analyst.
Morgan Stanley also cut the price target on Zoetis Inc. (NYSE:ZTS) to $160 from $175 and maintained an Overweight rating on December 18. The firm believes there is an “attractive backdrop for alpha-generation opportunities” for healthcare companies in 2026. On the other hand, managed care stocks have performed weakly in 2025 and are experiencing “another year of unprecedented policy, reimbursement, and utilization headwinds,” the analyst concluded.
Zoetis Inc. (NYSE:ZTS) is a New Jersey-based provider of various health products, including animal health medicines, vaccines, biodevices, and genetic tests. Incepted in 1950, the company is dedicated to becoming the most valuable animal health company.
9. Intuitive Surgical, Inc. (NASDAQ:ISRG)
Net Income (TTM): $2.86 billion
Operating Margin (TTM): 30.16%
Number of Hedge Fund holdings: 99
On January 26, TD Cowen began coverage on Intuitive Surgical, Inc. (NASDAQ:ISRG) with a Buy rating and a $660 price target, which suggests an upside potential of approximately 25%. According to the firm, the company is a core MedTech holding that has various procedure growth vectors to support its growth momentum.
Although Intuitive Surgical, Inc. (NASDAQ:ISRG) is a “consensus long,” survey work reflects the fact that Wall Street is overlooking the company’s “longer-tailed” and higher procedure volume growth prospects, TD Cowen noted, adding that the company is a “must-own, secular growth story.” With rising competition in the surgical robotics market, the firm believes that ISRG will sustain its leading market position.
On the same day, Freedom Capital Markets lifted the price target on Intuitive Surgical, Inc. (NASDAQ:ISRG) to $610 from $560 and upgraded the stock from Hold to Buy. The analysis reflects the firm’s confidence in the launch of ISRG’s da Vinci 5 surgical system, which it expects to increase both system sales and procedure volumes throughout the year.
Intuitive Surgical, Inc. (NASDAQ:ISRG) is a California-based company that provides products for physicians and healthcare providers to improve minimally invasive care. Founded in 1995, the company offers the da Vinci Surgical System, the Ion endoluminal system, and instrumentation-related systems.
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