Positioning for 2026: A Look at CFRA’s Top Healthcare Stock Picks

The healthcare sector, a vast and heterogeneous industry encompassing pharmaceuticals, medical devices, services, and insurance, presents a complex but compelling long-term investment landscape. While facing near-term pressures, the industry’s fundamental outlook remains positive, driven by enduring demand and powerful demographic trends. Profound structural shifts—from the rise of telehealth and evolving insurance models to demand for innovative products—are forcing established giants to adapt and creating openings for agile newcomers.

One of the most powerful investment narratives currently is the sustained momentum for GLP-1 agonists, drugs for type 2 diabetes and weight loss. With nearly 1 billion people globally living with obesity, the addressable market is immense. While Novo Nordisk (NVO) and Eli Lilly (LLY) are the current leaders, the competitive arena is far from settled.

Healthcare stocks have underperformed the S&P 500 in 2025, partly due to U.S. policy uncertainty. However, the sector’s defensive characteristics often shine during economic uncertainty, as patients typically do not defer essential treatments or prescriptions. Long-term growth is underpinned by aging demographics, with the Centers for Medicare & Medicaid Services projecting U.S. health spending to grow at an annual rate of 5.8% through 2033.

CFRA’s Stock Selections for 2026

CFRA analysts, including Sel Hardy, highlight six healthcare stocks with strong potential for 2026:

Eli Lilly & Co. (LLY): A key beneficiary of the GLP-1 boom, Lilly is positioned for growth with its weight-loss drug Zepbound, which will offer a $50/month Medicare copay starting April 2026. Its direct-to-consumer platform and robust pipeline provide additional catalysts.

Johnson & Johnson (JNJ): Recently upgraded by CFRA following strong Q3 earnings, J&J’s plan to spin off its orthopedics business aligns with its portfolio optimization strategy. Its Innovative Medicine and MedTech segments show impressive growth, and the acquisition of Intra-Cellular Therapies bolsters its neuroscience division.

AbbVie Inc. (ABBV): While facing headwinds from Humira’s patent expiration and Medicare Part D changes, AbbVie’s newer drugs Skyrizi and Rinvoq are expected to drive high-single-digit compound annual revenue growth through 2029, demonstrating its diversification strength.

Merck & Co. Inc. (MRK): CFRA views Merck as historically undervalued. Though its top-seller Keytruda faces loss of exclusivity in 2028, the company is actively diversifying through deals. Merck maintains leadership in oncology, immunology, and animal health.

Thermo Fisher Scientific Inc. (TMO): Differentiated by its fit/fill manufacturing network in the high-growth biologics market, Thermo Fisher is poised for a recovery in life sciences tools. Its global scale, innovation, and acquisition track record support long-term growth in a market projected to expand 8%-10% annually through 2030.

Amgen Inc. (AMGN): Several catalysts are expected in 2026, including newly launched drugs Tezspire and Lumakras, and the late-stage GLP-1 candidate MariTide. Its acquisition of Horizon Therapeutics diversifies revenue into rare diseases, with Horizon’s top three drugs projected to deliver significant sales.

The healthcare sector’s complexity necessitates thorough due diligence. However, for investors looking toward 2026, companies with innovative pipelines, strategic agility, and exposure to enduring trends like GLP-1 and an aging population may be well-positioned to navigate the ongoing transformation and deliver value.