In this article, we will take a detailed look at the Goldman Sachs Healthcare Stocks: Top 10 Stock Picks.
The healthcare sector has been under pressure, underperforming the S&P 500 over the past several years. The Health Care Select Sector SPDR ETF (XLV) is down approximately 58% from its 2020 highs, underscoring its underperformance. In addition, the sector has underperformed by 23.7% since the tariff-induced lows of April 8, whereas the overall market has rebounded.
According to Michael Khouw, Chief Strategist at OpenInterest.PRO, the underperformance is the widest margin in a decade. Amid underperformance, healthcare stocks are trading at a significant discount, with the sector’s 2025 price-to-earnings ratio dropping to 14, compared to the 10-year average of 18.
Analysts at Deutsche Bank believe a turnaround is around the corner. According to analyst Pito Chickering, the selloff has left healthcare stocks ready for a relief rally as soon as budget policy becomes clearer.
“The stocks have effectively been dead money and trading within a narrow band,” he wrote in a research note. “Over the coming months, we expect incremental clarity on the federal budget that will give investors’ confidence Medicaid’s worst-case scenario won’t happen.”
If history is anything to go by, then healthcare stocks could be in for a bounce back, as they tend to outperform in the first year of a Republican presidential term.
With that in mind, let’s look at the Goldman Sachs Healthcare Stocks: Top 10 Stock Picks.
A healthcare professional in front of a computer monitor analysing the results of a new prognosis prediction test.
Our Methodology
To compile the list of the Goldman Sachs Healthcare Stocks: Top Stock Picks, we scanned the Goldman Sachs’ investment portfolio. We settled on the investment bank’s top healthcare picks. We also settled on stocks popular in elite hedge funds and detailed their upside potential. Finally, we ranked these stocks in ascending order based on Goldman Sachs’ Equity Stakes, as of Q1 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).
Goldman Sachs Healthcare Stocks: Top Stock Picks
10. Gilead Sciences, Inc. (NASDAQ:GILD)
Goldman Sachs Equity Stake: $760.39 Million
Number of Hedge Fund Holders: 79
Gilead Sciences, Inc. (NASDAQ:GILD) is one of Goldman Sachs’ top healthcare stock picks. On July 10, the company announced it had reached an agreement with the Global Fund to Fight Aids, Tuberculosis, and Malaria. Under the agreement, the company is to make available its twice-a-year HIV pre-exposure prophylactic Yeztugo accessible to low- and middle-income countries.
It marks the first time that preventive HIV medicine will become available to low and middle-income countries, as is the case in high-income countries. As Gilead makes the drug available, the nonprofit is to select beneficiary countries based on HIV programs available in the places.
The FDA approved Gilead’s Yeztugo, a twice-yearly injection, last month. The approval is seen as a significant win for the company, with analysts insisting it has the potential to redefine the PrEP market. The drug is currently priced at $28,218 for a year’s worth of shots, and waiting to see if the company will offer the nonprofit organization a profit.
Gilead Sciences, Inc. (NASDAQ:GILD) is a biopharmaceutical company that discovers, develops, and commercializes medicines in the areas of unmet medical need. It develops medicines to prevent and treat life-threatening diseases, including HIV, viral hepatitis, and cancer.
9. Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX)
Goldman Sachs Equity Stake: $840.97 Million
Number of Hedge Fund Holders: 60
Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is one of Goldman Sachs’ top healthcare stock picks. On July 1, the European Commission approved the company’s new cystic fibrosis treatment, ALYFTREK (deutivacaftor/tezacaftor/vanzacaftor) for treating cystic fibrosis.
The approval comes on the basis of ALYFTREK demonstrating non-inferiority compared to the existing treatment, KAFTRIO, in terms of lung function measurement.
“Deutivacaftor/tezacaftor/vanzacaftor has shown it can deliver greater reductions in sweat chloride compared to standard of care,” said Professor Marcus A. Mall of Charité Universitätsmedizin Berlin, according to the press release statement.
With the approval, Vertex Pharmaceuticals stands to target over 31,000 people struggling with cystic fibrosis across the European Union. It will represent the broadest label for the medicine expected to strengthen the revenue base. The company has delivered a 9% revenue growth over the past 12 months.
Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is a biotechnology company that discovers, develops, and manufactures transformative medicines for people with serious diseases. It focuses on areas of cystic fibrosis, sickle cell disease, beta thalassemia, and acute pain while exploring treatments for type 1 diabetes and kidney disease.