As the healthcare sector continues to adapt in the evolving market landscape, analysts are spotlighting a number of undervalued stocks poised for growth as we approach 2026. Two strategists from JPMorgan recently published insights highlighting their renewed optimism for the healthcare industry, citing easing policy pressures and increasing merger and acquisition activity.
On December 5, 2025, the firm emphasized three key reasons for favoring healthcare stocks: the alleviation of monetary policy concerns, improved earnings clarity, and heightened M&A activity. Their report concluded, “After years of headwinds, the healthcare sector is showing signs of stabilization and renewed momentum.” This commentary has prompted investors to consider a range of healthcare stocks that are currently undervalued yet present significant upside potential.
Methodology for Stock Selection
The following list of 12 healthcare stocks is derived from a careful analysis of companies with robust upward potential. The selection criteria focused on those within the healthcare sector boasting a market capitalization exceeding $2 billion and covered by at least three analysts. The chosen companies exhibit a projected upside of over 10% and a forward price-to-earnings (P/E) ratio between 8 and 15. Additionally, data on hedge fund holdings as of Q3 2025 was incorporated to identify stocks favored by institutional investors.
The rationale behind focusing on hedge funds is straightforward: previous research indicates that mimicking the top stock picks of leading hedge funds can yield market-beating returns. A quarterly newsletter strategy has reportedly generated a return of 427.7% since May 2014, outperforming its benchmark by 264 percentage points.
Top 12 Undervalued Healthcare Stocks
1. **ICON Public Limited Company (NASDAQ: ICLR)**
**Upside Potential**: 14.87%
**Share Price**: $185.87
Currently rated as ‘Market Perform’ by BMO Capital, ICON is focusing on increasing investments in automation and AI, alongside addressing high cancellation rates. The company’s one-year median price target stands at $213.50.
2. **Lantheus Holdings, Inc. (NASDAQ: LNTH)**
**Upside Potential**: 18.48%
**Share Price**: $63.30
With nearly 80% of analysts recommending a ‘Buy’, Lantheus is navigating pricing pressures while aiming to bolster its market position.
3. **Elevance Health, Inc. (NYSE: ELV)**
**Upside Potential**: 19.12%
**Share Price**: $330.75
Elevance has garnered attention as a “Best Idea for 2026” from TD Cowen, with a revised price target of $400.
4. **The Cigna Group (NYSE: CI)**
**Upside Potential**: 22.44%
**Share Price**: $265.44
Cigna is trading at a decade-low valuation, enhancing its attractiveness as a potential investment according to multiple analysts.
5. **CVS Health Corporation (NYSE: CVS)**
**Upside Potential**: 22.97%
**Share Price**: $75.63
Analysts at Bernstein have noted CVS’s successful turnaround strategy, despite challenges in its Pharmacy Benefit Manager (PBM) segment.
6. **Sanofi (NASDAQ: SNY)**
**Upside Potential**: 23.16%
**Share Price**: $49.53
The company recently completed the acquisition of Vicebio Ltd., enhancing its respiratory vaccine capabilities.
7. **Novo Nordisk A/S (NYSE: NVO)**
**Upside Potential**: 29.57%
**Share Price**: $47.86
Novo Nordisk is set to introduce its diabetes drug Ozempic in India, marking a significant expansion into a high-potential market.
8. **Prestige Consumer Healthcare Inc. (NYSE: PBH)**
**Upside Potential**: 31.54%
**Share Price**: $60.82
Analysts remain bullish on Prestige, expecting continued growth despite recent revenue declines in North America.
9. **Catalyst Pharmaceuticals, Inc. (NASDAQ: CPRX)**
**Upside Potential**: 48.75%
**Share Price**: $23.53
Catalyst’s focus on oncology and its commitment to patient support positions it well for growth in a competitive landscape.
10. **Concentra Group Holdings Parent, Inc. (NYSE: CON)**
**Upside Potential**: 48.95%
**Share Price**: $19.47
Following strong revenue growth in the third quarter, Concentra has received positive ratings from several analyst firms.
11. **BioMarin Pharmaceutical Inc. (NASDAQ: BMRN)**
**Upside Potential**: 70.41%
**Share Price**: $53.40
Despite facing competitive pressures, BioMarin remains a strong player in the biotechnology sector.
12. **Soleno Therapeutics, Inc. (NASDAQ: SLNO)**
**Upside Potential**: 114.13%
**Share Price**: $51.37
With a consensus ‘Buy’ rating, Soleno is poised for significant growth following recent FDA approvals.
Investors looking for opportunities in the healthcare sector may find these stocks appealing as they navigate the complexities of the market. With analysts predicting a favorable environment for healthcare investments, these undervalued stocks could represent a strategic addition to portfolios heading into 2026.
