In this article, we will take a look at some of the best mid-cap healthcare stocks that are being highly favored by hedge funds. On June 2, Abbott CEO Robert Ford shared his views on how healthcare demand is expected to continue accelerating during an interview with CNBC. He noted that capital allocation has recently shifted towards high-growth AI-ecosystem companies, and the key questions now revolve around the pace of AI adoption. Ford said that healthcare demand is expected to accelerate, pointing to a global population of around 9 billion people living longer and getting older, which is driving increased healthcare needs over time.
He explained that in line with broader healthcare developments, Abbott has repositioned its portfolio to focus on areas with the greatest patient impact and participation in high-growth segments. These include cardiovascular care, medtech, wearables, branded generic pharmaceuticals, and diagnostics such as cancer diagnostics. Such a focused approach backs the company’s growth outlook, pipeline development, and long-term risk profile.
Ford also reflected on underlying challenges in certain segments that have directly impacted consumers. For instance, the nutrition business has faced cost and pricing pressures, which led to a consumer shift away from the category. However, Abbott has been efficient in navigating through these challenges through its recent actions.
Such a proactive approach is highly relevant in today’s immensely competitive healthcare landscape and will prove to be a major differentiator between winners and losers. With that background, let’s explore our 10 Most Promising Mid-Cap Healthcare Stocks According to Hedge Funds.
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Our Methodology
To identify relevant stocks for this article, we screened U.S.-listed healthcare companies with market capitalizations between $2 billion and $10 billion. Also, we only shortlisted stocks with at least 15% upside potential according to consensus, as of the close of June 1.
Next, we identified the number of hedge funds holding positions in these stocks as of the end of Q1 2026. Finally, we selected 10 stocks with the highest number of hedge funds holding stakes and ranked them in ascending order.
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. Insider Monkey’s quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 599.2% since May 2014, beating its benchmark by 372 percentage points (see more details here).
10. Hinge Health Inc. (NYSE:HNGE)
Hinge Health Inc. (NYSE:HNGE) is one of the 10 most promising mid-cap healthcare stocks according to hedge funds.
On May 7, Citizens maintained an Outperform rating for Hinge Health Inc. (NYSE:HNGE) while increasing the price target from $65 to $80. This revision follows strong operational momentum for the company. According to the firm, such growth is mainly driven by the improving profitability margins along with the accelerated invoicing and top-line expansion.
Currently, the company is also experiencing widespread market integration across prominent U.S. insurance networks as well as PBMs. Its continuing market development has been greatly aided by its robust distribution infrastructure and the demonstrated efficacy of its hardware-assisted care delivery. What has also added to the growth is the company’s strategic move to scale up its services portfolio to include extensive chronic ailment and pain therapies.
On May 7, Canaccord revisited its outlook for Hinge Health Inc. (NYSE:HNGE) following the company’s latest operational updates. The firm maintained a Buy rating on the stock and raised the price target from $53 to $63.
The firm noted that recent revenue upside was slightly lower compared to the previous quarter’s results. However, the overall operational efficiency is improving significantly. This is reflected in the company’s impressive margins and highly optimistic guidance from management. Company management also mentioned sharing revised long-term targets for its operating model at a client conference in June.
Hinge Health Inc. (NYSE:HNGE) leverages an AI-enabled care model to automate the delivery of healthcare services. The company delivers customized, drug-free pain relief to users through health plans devised by physical therapists. They address musculoskeletal conditions of patients through an FDA-approved wearable device that is user-friendly and cost-efficient.
9. Tango Therapeutics Inc. (NASDAQ:TNGX)
Tango Therapeutics Inc. (NASDAQ:TNGX) is one of the 10 most promising mid-cap healthcare stocks according to hedge funds.
On May 15, the price target on Tango Therapeutics Inc. (NASDAQ:TNGX) was increased from $28 to $55 by Leerink. Following the company’s results for the first quarter, the firm maintained an Outperform rating on the stock. Leerink sees this as a rare buying opportunity ahead of a significant twofold event that is anticipated by year’s end.
The firm observed that the stock has been under pressure, perhaps due to a competition cut and a loss of two board members. After speaking with management, it is now more optimistic about the projected data announcement in pancreatic ductal adenocarcinoma for the combination of daraxonrasib and vopimetostat.
The company’s optimism seems to have contributed to the choice to concentrate on the first-line pancreatic ductal cancer potential in conjunction with RAS(ON) inhibitors rather than starting vital research analyzing vopimetostat monotherapy in second-line pancreatic ductal adenocarcinoma. This strategic change, in Leerink’s opinion, is a wise move because success in the initial line of therapy may render later lines of treatment less effective and less profitable.
On May 14, Wedbush increased the target price for Tango Therapeutics Inc. (NASDAQ:TNGX) from $19 to $33, while upholding an Outperform rating on the shares. The adjustments came after the company’s quarterly results, and now lead to a revised upside potential of almost 43%.
Wedbush noted recent evolving vopimetostat developments and financing activities. It has forecasted continued PRMT5i data updates and asset development during the course of 2026.
Tango Therapeutics Inc. (NASDAQ:TNGX) is a precision oncology company focusing on the discovery and development of drugs targeting defined patient populations with unaddressed clinical needs. It develops TNG462, TNG45, and PRMT5 inhibitors for the treatment of pancreatic, lung, and brain cancer, respectively. The company is currently engaged in the development of TNG260 to treat lung cancer.
8. Erasca Inc. (NASDAQ:ERAS)
Erasca Inc. (NASDAQ:ERAS) is one of the 10 most promising mid-cap healthcare stocks according to hedge funds.
On May 11, Erasca Inc. (NASDAQ:ERAS) announced a supply agreement and a clinical trial partnership with Merck. The collaboration is aimed at facilitating the AURORAS-1 clinical proof-of-concept research. This research thoroughly assesses the exclusive pan-RAS molecular glue ERAS-0015 in conjunction with Merck’s anti-PD-1 treatment, KEYTRUDA, for patients fighting RAS-mutant solid tumors.
As per the arrangement, Merck will supply its therapeutic drug free of cost to the clinical-stage oncology firm, which will act as the principal research sponsor. Preclinical evidence shows that RAS mutations actively promote an immunosuppressive environment before this clinical development. Management hopes to overcome these biological hurdles and drive highly durable tumor responses by carefully combining ERAS-0015 with PD-1 blocking treatments.
With approximately 2.7 million global diagnoses of RAS-mutated tumors annually, the medical landscape indicates persistent challenges regarding broad treatment efficacy and drug resistance. Hence, in order to significantly enhance therapy results and substantially prevent the development of treatment resistance, the company intends to utilize this tailored combination.
Erasca Inc. (NASDAQ:ERAS) is a clinical-stage precision oncology company that focuses on developing and commercializing therapies for RAS/MAPK pathway-driven cancers. The product pipeline includes ERAS-0015, ERAS-4001, and ERAS-12. It has established licensing agreements with multiple pharmaceutical partners for the development of additional therapeutic compounds. These include naporafenib, ERAS-601, and ERAS-007.
7. Dyne Therapeutics Inc. (NASDAQ:DYN)
Dyne Therapeutics Inc. (NASDAQ:DYN) is one of the 10 most promising mid-cap healthcare stocks according to hedge funds.
On May 26, Dyne Therapeutics Inc. (NASDAQ:DYN) reached a major regulatory milestone by submitting its official Biologics License Application to the FDA for its new Duchenne muscular dystrophy treatment, z-rostudirsen. The company is seeking a Priority Review designation, which would safely cut down the standard regulatory waiting time from ten months to just six.
On top of that, the management is still planning for a commercial launch in the first quarter of 2027. This rapid progress makes the company a prominent name among growth stocks with upside potential as approvals stay on track.
On May 13, Bernstein increased the firm’s price target on Dyne Therapeutics Inc. (NASDAQ:DYN) from $23 to $24 while retaining a Market Perform rating on the stock. The adjustment leads to a revised upside potential of almost 29%.
With an 11% year-to-date increase, the biotech segment has experienced a solid start to 2026, outpacing both the S&P and the Pharma segment. Smaller names have prospered, with some under the firm’s coverage up 7% YTD on a basic-average measure and down 3% cap adjusted. All in all, Bernstein is optimistic about the industry since it anticipates strong M&A and IPO activity and perceives recent FDA leadership changes as favorable, especially for emerging firms.
Dyne Therapeutics Inc. (NASDAQ:DYN) is a biotechnology company that formulates life-transforming targeted therapeutics for individuals with genetically driven neuromuscular diseases. It uses its FORCE platform to identify the root cause of a condition and currently has a strong pipeline of clinical and preclinical programs.
6. Mineralys Therapeutics Inc. (NASDAQ:MLYS)
Mineralys Therapeutics Inc. (NASDAQ:MLYS) is one of the 10 most promising mid-cap healthcare stocks according to hedge funds.
On May 30, Mineralys Therapeutics Inc. (NASDAQ:MLYS) provided compelling data for the clinical efficacy of lorundrostat during the 35th European Meeting on Hypertension and Cardiovascular Protection. This clinical update comes after the company’s strategic focus on assisting patients with chronic kidney disease (CKD) in dealing with the combined burden of uncontrolled blood pressure.
The Phase 3 Launch-HTN trial analysis formally demonstrated significant, placebo-adjusted systolic blood pressure reductions of 9.6 mmHg in CKD participants and 12.2 mmHg in non-CKD populations over a standard 12-week period. For individuals with baseline albuminuria, the targeted therapeutic agent demonstrated a strong 52.2% decrease in the urine albumin-to-creatinine ratio in addition to a very good safety profile with few verified cases of hyperkalemia.
By aggressively increasing the clinical value of its diverse offers across high-risk patient groups, the company is hoping to obtain official regulatory permissions. Additionally, the U.S. Food and Drug Administration is presently reviewing Lorundrostat. The final PDUFA target action date is scheduled for December 22, 2026.
Mineralys Therapeutics Inc. (NASDAQ:MLYS) engages in the development of therapeutics that target illnesses caused by dysregulated aldosterone. It is working on the development of lorundrostat, an aldosterone synthase inhibitor for cardiorenal conditions. These include chronic kidney disease, hypertension, and obstructive sleep apnea.
While we acknowledge the potential of MLYS to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than MLYS and that has 100x upside potential, check out our report about the cheapest AI stock.
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