MW Healthcare stocks are on fire, and these offer value and rapid profit growth
By Philip van Doorn
Shares of CVS Health were up nearly 7% in premarket trading on April 7, after a pleasant industry surprise from the Centers for Medicare & Medicaid Services.
Early on Monday, the hottest stocks in the S&P 500 based on premarket trading were all in the healthcare sector and managed care providers were dominating.
These were the five best performers among the S&P 500 SPX at 7:15 a.m. ET, based on premarket trading as the index's futures prices were up about 0.4%:
Company Premarket price change Humana 11.4% CVS Health 6.6% UnitedHealth Group 5.7% Elevance Health 5.1% Centene 3.5% Source: LSEG
All of these companies are Medicare Advantage providers, including CVS Health $(CVS)$, which, in addition to its pharmacies, owns Aetna (a managed-care provider) and Caremark, which is a pharmacy-benefits manager.
Investors' strong reaction followed the Centers for Medicare & Medicaid Services' announcement of a large increase in the expected Medicare Advantage reimbursement rate for 2027.
Before the good news, the healthcare sector of the S&P 500 had been underperforming the full index for years. These are price changes, weighted by component companies' market capitalization, excluding dividends:
Sector or index 2026 price change through April 6 2025 price change 2024 price change 2023 price change
S&P 500 Healthcare sector -5.5% 12.5% 0.9% 0.3%
S&P 500 -3.4% 16.4% 23.3% 24.2%
Source: LSEG
Screening stocks of healthcare providers
The iShares U.S. Healthcare Providers ETF IHF was up 2.9% in premarket trading. This exchange-traded fund holds 60 stocks as it tracks the Dow Jones U.S. Select Healthcare Providers Index. The stocks in the underlying index are weighted by market capitalization, with limits of 22.5% for any one company and a limit so that stocks making up 4.5% or more of the index are limited to a total of 45% of the index.
IHF trades at a forward price/earnings ratio of 13.75, as calculated by LSEG based on weightings within the portfolio. This is far below the forward P/E of 19.85 for the SPDR S&P 500 ETF Trust SPY, which tracks the S&P 500.
A stock's forward P/E is its price divided by the consensus earnings estimate among analysts working for brokerage or research firms polled by LSEG.
After years of disappointing earnings performance due to difficulties earning profits from Medicare Advantage and from various cost pressures, the five companies listed above are expected by analysts to increase profits rapidly over the next three years.
Leaving the five companies in the same order, here are projected compound annual growth rates (CAGR) for earnings per share from 2025 through 2028, with the actual EPS for 2025 and the estimates for the following three years to the right.
Company Estimated EPS CAGR through 2028 2025 EPS Est. 2026 EPS Est. 2027 EPS Est. 2028 EPS
Humana 37.4% $9.82 $9.24 $15.02 $25.49
CVS Health 89.5% $1.38 $7.17 $8.18 $9.39
UnitedHealth Group 21.6% $13.19 $17.85 $19.85 $23.72
Elevance Health 10.9% $25.12 $25.91 $29.32 $34.31
Centene N/A -$13.62 $2.99 $3.97 $5.69
Source: LSEG
There is no EPS CAGR for Centene $(CNC)$ because the company booked a large noncash goodwill charge on acquired assets in the third quarter, resulting in a net loss of $13.62 a share for the year.
The projected EPS CAGR above compares with weighted three-year EPS CAGR estimates of 10% for the S&P 500 healthcare sector and 15% for the full S&P 500, according to LSEG's data.
Going back to the full list of 60 stocks held by the iShares U.S. Healthcare Providers ETF, we can narrow down the group to 34 that are covered by at least five analysts polled by LSEG and for which consensus EPS estimates are available through 2028.
Among those 34 stocks, 22 have projected EPS CAGR through 2028 higher than the 15% projected for the S&P 500.
Here are the 10 remaining stocks trading at the lowest forward P/E valuations based on Monday's closing prices:
Company Forward P/E Estimated EPS CAGR through 2028 Cigna 8.8 18.8% CVS Health 9.7 89.5% DaVita 10.2 23.4% Progyny 12.1 38.8% Waystar Holding 13.9 51.8% Doximity 13.9 16.8% Option Care Health 14.2 22.6% PACS Group 14.8 27.1% Labcorp Holdings 15.0 26.1% UnitedHealth Group 15.1 21.6% Source: LSEG
Among the five premarket movers listed above, CVS and UnitedHealth Group $(UNH)$ made this last list. Humana's $(HUM)$ forward P/E was 16.8 as of Monday's close, while Elevance (ELV) had a forward P/E of 11.3 and Centene's forward P/E was 10.7.
Any stock screen is only a snapshot, meant to help you with your own research through which you can form your own opinion about a potential investment. One way to further your research is to click on the tickers for more information.
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-Philip van Doorn
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April 07, 2026 08:57 ET (12:57 GMT)
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