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.
8. Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX)
Net Income (TTM): $3.68 billion
Operating Margin (TTM): 40.27%
Number of Hedge Fund holdings: 61
On January 26, UBS increased the price target on Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) to $545 from $535 and reiterated a Buy rating on the stock. According to TheFly, the firm is optimistic about the U.S. Pharmaceuticals and Biotechnology group, primarily due to attractive valuations, favorable positioning, and sustained pharma-led M&A initiatives.
Earlier, on January 23, Evercore ISI lifted the price target on Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) to $530 from $475 and maintained an Outperform rating. This follows the firm’s updated analysis of the Vertex model, with revisions focused on povetacicept’s pricing and total addressable market (TAM), as well as changing views of the BAFF/APRIL environment.
Interestingly, povetacicept is expected to nearly double the current high consensus forecast of $4 billion, with substantial upside not yet fully realized by investors. That said, the firm remains confident in Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX)’s pipeline, particularly the revenue potential of its BAFF/APRIL inhibitor program in the long haul.
Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is a Massachusetts-based biotechnology company specializing in therapies for treating cystic fibrosis (CF). Founded in 1989, the company is committed to bringing transformative medicines to patients with life-threatening diseases.
7. Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN)
Net Income (TTM): $4.58 billion
Operating Margin (TTM): 29.56%
Number of Hedge Fund holdings: 78
Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) reported Q4 2025 results on January 30, with revenue coming in at $3.9 billion (+3.0% year over year), which were around 3% ahead of consensus. Profitability was even better with adjusted EPS for the quarter reaching $11.44, 7% above street expectations.
Focusing on the drivers of healthy performance, the company’s President and CEO, Leonard S. Schleifer, stated,
Regeneron performed well in 2025, with financial strength driven by our four blockbuster medicines and future growth supported by our exciting late-stage clinical portfolio. In the fourth quarter, we secured label expansions and new filler solutions for EYLEA HD, further enhancing its commercial potential. Dupixent received new approvals in Japan and Europe and is currently the most widely used innovative branded antibody medicine, with over 1.4 million active patients worldwide. Libtayo also secured additional approvals and continues to be the leading immunotherapy for non-melanoma skin cancers.
Around four days before the results were released, BofA Securities maintained its Buy rating and $860 price target on Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN). The firm fully incorporates the impact of the company’s 2026 R&D estimates, $60 million donation, fourth quarter Eylea pre-announcement, and IPR&D disclosure.
BofA Securities expected Q4 Sanofi collaboration revenues of $1.6 billion, up 32% YoY, Bayer collaboration revenues of $361 million, down 4% YoY, and Libtayo revenues of $425 million, up 16% YoY. For 2026, the firm estimated U.S. Eylea franchise revenues of $4.43 billion, which is higher than both its initial forecast of $4.35 billion and the consensus projection of $3.95 billion. Thus, the reaffirmed buy rating was driven by several factors, including Eylea HD prospects, Dupixent upside potential, and the company’s pipeline opportunities.
Earlier, on January 22, Evercore ISI lifted the price target on Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) to $875 from $750 and reiterated an Outperform rating. The firm highlighted Dupixent’s sustained growth momentum and the upcoming Eylea HD, which is expected to compete fiercely with a prefilled syringe launch scheduled for the second quarter of 2026.
Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) is a leading biotechnology company serving people with eye, cardiovascular, cancer, and inflammatory diseases. Headquartered in New York, the company develops and markets life-changing medicines for people with severe illnesses.
6. Gilead Sciences, Inc. (NASDAQ:GILD)
Net Income (TTM): $8.11 billion
Operating Margin (TTM): 45.23%
Number of Hedge Fund holdings: 61
On January 26, UBS lifted the price target on Gilead Sciences, Inc. (NASDAQ:GILD) from $145 to $155 and maintained a Buy rating, according to TheFly. Slightly below the consensus 1-year high price target, the revised target implies nearly 12% upside.
From appealing valuations and light positioning to supporting drug-pricing overhangs and sustained pharma-led M&A activity, there are many reasons to believe in the strong performance of the U.S. Pharmaceuticals and Biotechnology group, the analyst noted. UBS noted that although there are worries regarding the conservative guidance, particularly after the recent rally, inexpensive valuations for big pharma and biotech are expected to continue positive money flows into the sector.
On the same day, BMO Capital also raised its target on Gilead Sciences, Inc. (NASDAQ:GILD) to $150 from $135 and reiterated an Outperform rating on the stock. While highlighting the Yeztugo launch, which achieved $150 million in FY25 sales, the firm cited strong momentum in the company’s HIV business.
Gilead Sciences, Inc. (NASDAQ:GILD) is a California-based biopharmaceutical company specializing in medicines aimed at unmet needs. Founded in 1987, the company provides a range of products as solutions for HIV/AIDS, COVID-19, viral hepatitis, oncology, pulmonary arterial hypertension, and serious invasive fungal infections.
5. Novartis AG (NYSE:NVS)
Net Income (TTM): $14.39 billion
Operating Margin (TTM): 31.93%
Number of Hedge Fund holdings: 33
On January 27, Graham Parry from Citi began coverage of Novartis AG (NYSE:NVS) with a Buy rating and a price target of CHF 133, TheFly reported. According to the analyst, the company is well-positioned to sustain its strong momentum, with 5%-6% annual sales growth guidance through 2030.
Earlier on January 20, Novartis AG (NYSE:NVS) said that it is likely to be protected from U.S. tariffs by mid-2026. As told by CEO Vas Narasimhan to CNBC,
We expect to be in a position by middle of this year where we are not really exposed to tariffs, because we’re able to produce in the U.S. for the U.S. We have inventory on hand.
What reaffirms this optimistic view is the company’s agreement with the U.S. government, which is expected to exclude Novartis AG (NYSE:NVS) from tariffs. These comments follow the Trump Administration’s plans to impose 10% tariffs on many European countries, including the UK, Denmark, Sweden, and Germany. The company is also investing in regional supply chains to minimize its exposure to trade policies in the future.
Novartis AG (NYSE: NVS), headquartered in Basel, Switzerland, is a pharmaceutical company. Incorporated in 1996, the company offers Entresto, Cosentyx, and Kisqali, among others.
4. Novo Nordisk A/S (NYSE:NVO)
Net Income (TTM): $16.30 billion
Operating Margin (TTM): 44.35%
Number of Hedge Fund holdings: 50
On January 26, BMO Capital lifted the price target on Novo Nordisk A/S (NYSE:NVO) to $57 from $47 and maintained a Market Perform rating. The firm highlighted flat prescription trends (TRx) for the company’s weight loss candidate Wegovy in the fourth quarter of 2025 relative to the third quarter.
BMO Capital reduced its 2025 Wegovy sales estimate to DKK 77.8 billion, down from DKK 79.8 billion, compared with a consensus forecast of DKK 78.4 billion. Despite favorable tailwinds, including the CVS exclusivity agreement, pressures like the anticipated QoQ pricing continue to exist, the firm noted. That said, BMO Capital estimates a relatively flat 2026 U.S. prescription volume compared with 2025 levels, which would lead to negative YoY U.S. net sales growth.
Three days earlier, Reuters reported that the company’s Wegovy drug was prescribed over 18,000 times in the U.S. during the first full week following its launch. The report cited James Gordon from Barclays, who said,
“The early oral Wegovy launch data is very strong, albeit in a now far better established obesity market versus building the obesity market.”
Novo Nordisk A/S (NYSE:NVO) is a Denmark-based company that specializes in pharmaceutical products. Founded in 1923, the giant operates through two segments: Diabetes and Obesity Care and Rare Disease.
3. Eli Lilly and Company (NYSE:LLY)
Net Income (TTM): $18.41 billion
Operating Margin (TTM): 48.29%
Number of Hedge Fund holdings: 114
On January 26, Srikripa Devarakonda, an analyst at Truist Financial, maintained a Buy rating on Eli Lilly and Company (NYSE:LLY), while setting a price target of $1,182. This reflects an upside potential of 11%.
Earlier, on January 20, Bernstein maintained an Outperform rating and a price target of $1,300 on Eli Lilly and Company (NYSE:LLY), citing the company’s efforts to capitalize on the oral medication opportunity. What’s even more interesting is that the healthcare giant also remains focused on global expansion and diabetes growth, which is anticipated to materialize next year.
According to Bernstein, Eli Lilly and Company’s (NYSE:LLY) beyond-incretin pipeline will need to increasingly demonstrate its next leg of growth by the end of the decade. The firm is positive about the company’s foundations, whilst believing 2026 to be the year for potential upside surprises. Having said that, the firm recognised the company as its top stock pick in the sector.
Eli Lilly and Company (NYSE:LLY) is an Indiana-based company that discovers, develops, and markets human pharmaceuticals. Founded in 1876, the company is committed to improving people’s lives worldwide.
2. Merck & Co., Inc. (NYSE:MRK)
Net Income (TTM): $19.03 billion
Operating Margin (TTM): 40.80%
Number of Hedge Fund holdings: 92
On January 21, TheFly reported that BofA analysts included Merck & Co., Inc. (NYSE:MRK) in its “US 1 List,” which includes the firm’s top investment ideas.
A day earlier, Bernstein reiterated its Market Perform rating on Merck & Co., Inc. (NYSE:MRK), with an unchanged price target of $95. While discussing headwinds related to the company’s growth prospects within this year, the firm raised the question of whether meaningful growth beyond Keytruda may only emerge in 2027.
Additionally, Bernstein highlighted the company’s renewed focus on M&As, noting the company’s “willingness to spend tens of billions” on potential strategic deals. Despite this, the firm experiences “struggle to validate if there’s a path to build confidence” in Merck & Co., Inc. (NYSE:MRK)’s short-term growth momentum. Thus, their analysis indicates a performance in line with the general market.
Overall, Merck & Co., Inc. (NYSE:MRK) has mixed analyst sentiment, with slightly more than half of analysts recommending a Buy and the remaining 45% holding a cautious view. With a consensus 1-year median price target of $120, the stock boasts an upside potential of 10.93%.
Merck & Co., Inc. (NYSE:MRK) is a New Jersey-based healthcare company developing and manufacturing human health pharmaceuticals for a range of areas. Founded in 1891, the company is committed to saving and improving lives through the power of science.
1. Johnson & Johnson (NYSE:JNJ)
Net Income (TTM): $26.8 billion
Operating Margin (TTM): 22.99%
Number of Hedge Fund holdings: 103
On January 22, TD Cowen lifted the price target on Johnson & Johnson (NYSE:JNJ) to $250, up from $222, and maintained a Buy rating, citing the company’s fourth quarter results. The revised price target reflects an upside potential of approximately 14%.
According to the firm, the initial projection of Johnson & Johnson (NYSE:JNJ) should uplift the consensus revenue and EPS forecasts for the healthcare powerhouse. From this year and beyond, the company’s Pharmaceutical and Medical Devices franchises are expected to continue their growth trajectory, TD Cowen noted.
On the same day, several other analysts updated their outlooks to better reflect the company’s Q4 performance, which exceeded market estimates with $24.6 billion in revenue. BofA Securities also slightly raised its price target on Johnson & Johnson (NYSE:JNJ) from $220 to $221 and reiterated a Neutral rating on the stock. The company’s financial results were described as “solid” by the firm, which attributes it to the growth drivers, particularly currency movements.
Johnson & Johnson (NYSE:JNJ), headquartered in New Jersey, offers healthcare products worldwide. Founded in 1886, the company operates in two main segments: Innovative Medicine and MedTech.
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