By Lauren R. Rublin and Josh Nathan-Kazis

All roads now lead to Washington, D.C., for the U.S. healthcare sector and investors in healthcare stocks. From hospitals and health insurers to pharma and biotech companies, the sector has been disrupted by the Trump administration, which has slashed spending for research, altered vaccine protocols, backed legislation to cut Medicaid spending, and much more. Late Thursday, President Donald Trump stoked further turmoil, threatening to impose a 100% tariff on imported pharmaceuticals beginning on Oct. 1 unless the companies that make them are currently building plants in the U.S.

Given the resultant uncertainty, it is no surprise investors have shunned healthcare stocks, notwithstanding miraculous medical advances and the ever-growing demand for care.

It is also no surprise that the recent changes in healthcare policy and personnel dominated much of the discussion at Barron's 2025 healthcare roundtable, held Sept. 12 on Zoom. While our four panelists specialize in analyzing different segments of the market, all are focused on the myriad ways that Trump and Health and Human Services Secretary Robert F. Kennedy Jr. are altering the healthcare landscape and the road map for the companies they cover.

This year's panelists include Jared Holz, healthcare equity strategist at Mizuho; Chris Meekins, managing director, Washington healthcare policy research, at Raymond James Financial; Salveen Richter, a managing director at Goldman Sachs covering the U.S. biotechnology sector in global investment research; and David Risinger, senior managing director and senior research analyst at Leerink.

If there is any upside for investors in the industry's upheaval, it is that many healthcare stocks are cheaper today than they have been in a long while. Many pharma and biotech pipelines may be undervalued, just as the shares of many health insurers and medical device makers may be closer to a bottom than any discernible top.

Our panelists highlight 16 such bargains, along with their big-picture views, in the edited transcript that follows.

Barron's: Healthcare stocks are underperforming the broader stock market again this year. The Health Care Select Sector SPDR exchange-traded fund, or XLV, is down 2.5%, compared with a gain of 12% for the S&P 500. It was the same story in 2023 and 2024: Healthcare stocks have been laggards for a long time. Is there any hope for a return to outperformance? Jared, what is your view?

Jared Holz: The primary reason for this relative underperformance is the complexity of the sector. It seems far easier to make money elsewhere in the market. Does it get better from here? That depends, in part, on the performance of other sectors -- and a little breathing room with respect to healthcare policy would help. So much of the policy discourse has taken the incremental investor away from the healthcare sector. But until the tech sector feels pressure over a consistent period of time, I just can't see healthcare outperforming.

Chris, you're the policy specialist here. What do you see?

Chris Meekins: Any time an election leaves one party in control of government, it creates additional unsettledness for healthcare. Usually in such periods, an investor can "hide out" in managed-care stocks, but the managed-care industry has its own issues with previous policies and the hangover from bad rate updates to Medicare Advantage plans.

We have reached the phase where most of the policy risk is behind us in the healthcare sector. It doesn't mean good times are coming. It just means we know what to expect in terms of negatives, such as looming cuts in Medicaid funding and the year-end expiration of the Affordable Care Act's expanded subsidies [that lower the cost of insurance purchased on the ACA Marketplace]. Once investors understand what is coming, they can price in the negatives and get back to analyzing company fundamentals.

Let's get Salveen's take on the outlook for biotech.

Salveen Richter: Policy has been an overarching dynamic that has played into generalist investors ' lack of interest in healthcare. Compounding that, some popular investment themes have unwound. The obesity trade worked for a long time, but lately has been disappointing. Once-popular stocks such as UnitedHealth Group have struggled. Investors see better prospects in other sectors, such as tech.

Biotech has always attracted more specialists than other healthcare stocks, but investors need clarity on policy. On the Food and Drug Administration side, we're getting there. On drug pricing, there are two aspects. First, we are still waiting for a determination on Section 232. [The Trump administration launched an investigation under this section of the Trade Expansion Act of 1962 into whether U.S. dependence on drug and pharma-ingredient imports poses a national security threat. The latest tariff announcement may relate to the findings.] Recall that potential pharmaceutical tariffs are an important part of the administration's ongoing negotiations with the industry on investing in the U.S., and also drug pricing.

Second, and more important, we are waiting to see developments around Most Favored Nation [MFN] pricing and Inflation Reduction Act Medicare negotiations.

Apart from all that, we have seen negative earnings revisions for the healthcare sector broadly through 2025, but they have largely stabilized for large-cap biotech and trended higher post-second-quarter earnings.

We expect investors to position in the biotech sector with the following factors in mind: earnings revisions; policy, particularly on the drug-pricing front; interest rates, where we could see a move toward smid-cap [small- and mid-cap] biotech after a relatively difficult period; and M&A [mergers and acquisitions], while recognizing that innovation is the key underlying driver of this group.

David, how would you describe the outlook?

David Risinger: The other speakers have understated the negative impact of Washington's approach to the biotech industry. The government has been extremely supportive of the technology sector. On the other hand, it has pursued actions to take U.S. drug prices down and disrupt innovation in the medical field, with cuts in funding to universities, the National Institutes of Health, and such. Generalist investors probably struggle to know where Washington's actions will shake out with respect to the biopharmaceutical industry.

Hopefully, the administration will become more constructive toward U.S. biopharma. We hope it will appreciate that biopharma is a crown jewel for the country in generating lifesaving medicines and vaccines, and innovation and jobs. We don't know when the tide will turn, but when it does, it could draw more generalists into the sector.

Robert F. Kennedy Jr., secretary of Health and Human Services, has disrupted the government agencies that interact with the healthcare sector. We are seeing layoffs, resignations of senior officials, and cancellations of grants and contracts. Chris, you recently wrote that Kennedy isn't going anywhere, at least before next year's midterm election. What does that mean for the sector?

Meekins: Our point was that this is a political relationship: President Trump rewarded Kennedy for backing him and helping him win the 2024 election. Kennedy will stay as long as the benefit of having his supporters back Republicans in the midterms outweighs the cost of alienating swing voters. If Republicans lose control of the House of Representatives in 2026, Kennedy probably won't be in that job anymore.

My investor base as a healthcare policy analyst typically was 60/40 specialists to generalists. Now it is probably 85% specialists, 15% generalists. There is drama everywhere in healthcare right now. Much of what is happening in healthcare investing is a healthcare specialist/hedge fund knife fight.

That sounds nasty. Speaking of drama, Salveen, you cover Sarepta Therapeutics, which had some wild weeks this summer due to an FDA policy reversal. The company's gene therapy for treatment of Duchenne muscular dystrophy had a safety issue. The FDA requested that the company suspend distribution, then reversed that position for certain patients. Extrapolating from that experience, what is the impact on other companies you cover?

Richter: It is harder to predict the FDA's positions than in the past. There have been many leadership changes, and there are talent holes. Also, there have been internal policy changes regarding how the FDA looks at specific disease areas and how they communicate across divisions. Some areas of healthcare reflect this turmoil, although in other areas, investors are less concerned.

In gene therapy, people are trying to understand the benefits of surrogate versus functional endpoints, and whether surrogate endpoints are considered beneficial enough to allow for approval. [Surrogate endpoints are indirect measures thought to predict clinical benefit; functional endpoints measure patient benefits directly.] So there is some volatility there.

Also, some drugs in late stages of development or under regulatory review are now being debated because of FDA leadership changes, with the incorporation of a new benefit/risk framework. And, the FDA recently issued several complete response letters, or CRLs, for example, rejecting drug applications based on manufacturing/CMC [chemistry, manufacturing, and controls] issues as opposed to clinical reasons, likely partly due to the recent turnover and staffing at the agency. Wall Street is still trying to determine how to position around these factors and how these dynamics will evolve.

There was a lot of concern across the biopharma industry when Dr. Peter Marks, head of the FDA's Center for Biologics Evaluation and Research, was effectively forced out earlier this year. His replacement, Dr. Vinay Prasad, later resigned, but then returned. David, what do these developments mean for the pharma companies you cover?

Risinger: We hope that the FDA stabilizes and that it takes more action to lower regulatory requirements and speed novel treatments to patients. We also hope the FDA pivots to a more constructive stance toward vaccines. There is significant medical-industry support for the use of vaccines.

In June, Kennedy fired all 17 members of the Advisory Committee on Immunization Practices, which makes vaccine recommendations to the Centers for Disease Control and Prevention. He replaced them with eight new members, some of whom have raised questions about vaccine safety. Pharma companies will continue to sell vaccines successfully, but the changes could raise questions about the adoption and utilization of vaccines in the U.S. On the margin, that could make it more difficult for investors to forecast sales for the major vaccine companies.

The One Big Beautiful Bill Act, signed in July, is projected to reduce Medicaid spending by $900 billion over the next 10 years. It is expected to increase the number of uninsured people by 10 million, mostly through the imposition of new work requirements. Chris, what sort of impact will these cuts have on insurance companies, hospitals, and other companies in the healthcare sector?

Meekins: Those numbers are probably high, but we know there will be a material cut. Also, it is important to remember that in D.C., a cut is a decrease to an increase in spending. A decade from now, we are going to be spending more money on Medicaid than we do today.

So what is the impact? When it comes to hospitals, Medicaid used to have the lowest reimbursement rate out there. Hospitals would lose money on Medicaid patients. But with state-directed payment programs, payments to hospitals have exploded upward, from less than $20 billion to more than $110 billion.

Insurers involved in the Medicaid space are going to see budget pressures. They will try to put pressure on providers, and that will be felt down the line. Hospitals probably won't see continued increases in reimbursement rates, as they did in the past several years, which means they will need to find other ways to make money. When you couple Medicaid cutbacks with the potential expiration of Affordable Care Act expanded subsidies, especially in states such as Texas and Florida, publicly traded hospital companies will face challenges to continued growth.

I am shocked that investors aren't paying closer attention. Most publicly traded hospital stocks and some ancillary stocks are trading near year-to-date highs. Yet the industry faces the risk of negative changes. These providers will have a lot to prove to keep the numbers going the way they have gone for the past couple of years.

How do you explain investors' complacency?

Holz: There are too many concurrent risks in healthcare. This will probably become a bigger issue when it is too late.

Meekins: I agree. On the positive side, hospitals are getting much better at using AI to maximize the use of medical codes and improve revenue-management cycles, and ensure their doctors are prescribing everything that can be justified to improve reimbursement. But the hospitals are simultaneously fighting insurers' use of AI to examine claims and prior authorizations.

We have touched on drug pricing, but let's go further. President Trump favors pegging some U.S. drug prices to the generally lower prices paid by other wealthy "Most Favored" nations. Details of the proposal have shifted, but this seems a priority for the administration. Pharma companies seem to be pushing direct-to-consumer sales as a response of sorts. David, what do the administration's pricing efforts mean for biopharma companies, and how should investors weigh the risk?

Risinger: At a high level, MFN represents a significant threat to reduce U.S. drug pricing to levels dictated by countries with socialist healthcare systems. Although U.S. officials may use tariff and trade negotiations as leverage to drive up the prices that other countries pay for drugs to create room for companies to reduce U.S. prices, it remains to be seen if the Trump administration will succeed in boosting what ex-U.S. countries pay.

We believe members of Congress understand that the U.S. biopharmaceutical industry is a tremendous asset to the country, as evidenced by the fact that the House of Representatives resisted a Trump administration proposal in May 2025 to apply Most Favored Nation pricing to Medicaid drug prices. That was a sign that certain Republicans want to see the U.S. biopharma industry continue to lead the world in innovation to prevent, treat, and cure disease.

Meekins: The Trump administration can't legally ban direct-to-consumer drug ads, but is trying to make it more difficult for companies to advertise. Companies are engaging in delicate government-affairs activity to navigate the situation. There is going to be hesitation to file lawsuits against the administration and engage in a public relations war. Pharma companies are worried about all the levers the government can pull.

Richter: In July the government sent letters to 17 pharmaceutical companies outlining steps to take to bring drug prices into line with those of other developed nations. It is interesting that the industry hasn't responded with a unified message. However, that is likely partly because there is not yet a formal policy, likely due to ongoing discussions with the administration ahead of implementation.

Holz: The industry might retaliate in a more proactive way with a different presidential figure, but no political party seems pro the drug industry. It doesn't matter who the president is, or who is running the agencies. There is constant pressure on the biopharma industry coming from Washington.

Obesity treatments were an exciting development in healthcare -- and on Wall Street -- two years ago, and even last year. Now the enthusiasm has waned, along with the valuations of companies such as Novo Nordisk and Eli Lilly. The business has become increasingly complicated, the threat posed by compounded GLP-1 drugs persists, and some highly anticipated follow-on drugs have disappointed. Sales projections are starting to fall. Jared, were investors too optimistic about this market, and if so, how should they reframe their thinking?

Holz: The analyst base covering the stocks on Wall Street was appropriately excited. Few facets of pharma have been as compelling as obesity treatments over the past decade, so you can see why investor euphoria was high.

There are still reasons to think this is a $100 billion industry. This is just the second full year in which both Novo and Lilly have had approved drugs for obesity, and the category is posting sales at an annualized rate north of $30 billion. That excludes the compounders, which are probably another 10% to 20% of the market. Yes, the optimism has abated from peak levels, but optimism is still warranted. This will be the largest category in biopharma for the foreseeable future.

I would caution, however, that this is a consumer market, not a healthcare market, and I am not sure what the best way is to look at that in terms of the stocks and valuations. The majority of people taking these drugs will likely do so episodically, rather than for therapeutic use.

Risinger: I agree with Jared that this will remain a huge market. Novo faced significant sales shortfalls this year due to competitive pressures from Eli Lilly's Mounjaro and Zepbound, plus ongoing compounding of semaglutide. In addition, GLP-1 market growth is increasingly being driven by the cash pay market. U.S. employers have hesitated to add commercial insurance coverage for anti-obesity medicines in 2025 due to drug spending concerns, and most ex-U.S. countries don't cover GLP-1s for the treatment of obesity.

Still, the growth potential remains tremendous. We just launched coverage of Metsera, a biotech company that we think offers differentiated potential in the field of obesity treatments.

How important are weight-loss pills?

Risinger: They are a big deal. Many consumers are hesitant to pursue the use of injectable products for cosmetic reasons. But pills are easy to take, and we expect demand to be off the charts for Lilly's orforglipron. [The company will file for its use as an obesity treatment in the coming months.] It has the advantage of being a small molecule that can be manufactured at tremendous scale. That said, there are tolerability issues with small molecules if patients miss more than a few days of pills. Metsera's oral peptide, which is entering human testing, may be more effective and more tolerable. Early clinical trial data for three Metsera drug candidates -- monthly injectable GLP-1, monthly injectable amylin, and daily oral GLP-1 -- should be generated in coming months.

Salveen, do you see room for other drugmakers to challenge Lilly and Novo?

Richter: Improvements in tolerability and delivery are key, and you could always see greater efficacy for more severe patients. Wall Street is essentially ascribing the majority of future GLP-1/obesity market share to a duopoly -- Lilly and Novo, notwithstanding competition. We ascribe $3 billion of revenue to Amgen's GLP-1 drug, MariTide, in Phase 3 clinical trials, which we view as potentially differentiated. While the drug is subject to debate given the tolerability profile observed to date, in the context of the broader competitive landscape, the Phase 3 outcome will be key. We are also waiting to see whether there is a biosimilar introduced for diabetes treatment later in the decade.

U.S. drug companies are increasingly looking to China for innovation. Recently there has been a string of licensing deals of Chinese drugs and biotech assets for a new class of cancer drugs, weight-loss pills, and other medications. There are also reports that the Trump administration is weighing an executive order to restrict the licensing of Chinese drugs and mandate review by a federal national security committee. David, how important is access to Chinese biotechnology for U.S. pharma companies?

Risinger: It has been reported that the pharma industry is lobbying to continue to have access to Chinese innovation. Large U.S. pharma companies want to enhance their internally developed pipelines with external drug candidates to improve their long-term growth prospects. Chinese biotechs have increasingly outlicensed novel drugs to global biopharmaceutical companies for development and commercialization outside of China. Certain U.S. companies, such as Merck and Pfizer, recently announced deals with Chinese biotech companies to bring new medicines to patients in the U.S. and abroad.

Salveen, will the U.S. biotech ecosystem wither as pharma companies do deals with Chinese companies? What is the threat, or opportunity, for biotechs here?

Richter: I'll make a couple of points. One, when we saw large biopharma companies going to China to acquire assets or partner with Chinese companies, some U.S. biotechs lost the M&A premium in their stocks. The investor supposition was they likely wouldn't become acquisition targets.

There is also concern among investors in some biotech companies that there will be fast followers from China focused on similar targets. A lot of the innovation coming from China is in the form of fast followers rather than novel technologies aimed at new therapeutic targets. I expect true innovation in the U.S. will continue to be rewarded.

The U.S. system will adapt. U.S. companies are learning to be careful not to disclose their targets too early. They are putting a lot of intellectual property protection around their assets. There will be an evolution, but we have to include China in the pie.

Holz: China's becoming a major player in biotech has complicated an already tricky segment of the market. The market has been inundated in the past decade with not only public but private biotech companies. That is one reason why the sector has been disappointing from an investment perspective. Now you have to figure out what is happening in another, often opaque region. Which companies or therapeutic classes may be superseded by Chinese assets?

I agree with Salveen about the erosion of potential M&A premiums in biotech. And while most Chinese assets aren't novel, Chinese companies' ability to accelerate development timelines is something we have to be honest about. If they can create products less expensively and more efficiently, this trend will continue.

As for Trump's possible executive order, it will be less relevant if pharma remains acquisitive. Once Chinese assets are within the confines of U.S. or European-domiciled companies, the conversation gets a little easier.

Chris, what do you make of the apparent debate within the administration about restrictions on Chinese biotech deals?

Meekins: We talked earlier about the fact that both political parties are critical of high drug prices, and that pharma doesn't have a lot of friends. Both parties are also concerned about what is happening in the Chinese biotech space. I wrote some three-plus years ago that a growing healthcare theme in the next five to seven years would be biotech as a national security issue. Maybe that view was influenced by my time working at the Department of Health and Human Services in biodefense.

But there is no question that there is concern in this administration about what is happening with China, whether it is control of key raw materials, manufacturers' reliance on China, control of intellectual property, or other things. This is going to be a growing theme.

We have established that healthcare is an unloved sector on Wall Street and elsewhere. That suggests there are bargains among healthcare stocks. Salveen, which companies and stocks look most attractive to you?

Richter: I have two large-caps and two smid-caps to recommend. As an emerging large-cap, Alnylam Pharmaceuticals has performed well on the back of its launch of Amvuttra to treat a cardiovascular disease called ATTR-cardiomyopathy, and as it transitions to profitability. We think the stock still has legs. ATTR cardiomyopathy is a large commercial opportunity, and Alnylam has the first-in-class treatment.

The company has a second lever via its platform technology known as RNAi, which enables it to address multiple disease areas. We will see a lot of that pipeline read out [test results will become available] in the coming years, including Phase 3 data for a next-generation TTR drug under development for both polyneuropathy and cardiomyopathy. If it works it would be administered biannually versus quarterly, and result in the removal of a 30% royalty on Amvuttra that Alnylam is paying to Sanofi.

Also, Alnylam has limited exposure to the drug-pricing dynamics we have been discussing. The Inflation Reduction Act exempted orphan drugs from Medicare price negotiation, and the One Big Beautiful Bill Act expanded that exemption under certain conditions. Now orphan drugs can be approved for multiple rare diseases and still be exempt from these negotiations.

Alnylam's stock price has nearly doubled this year, to a recent $450. How much more upside do you see?

Richter: If we look just at TTR, the company is valued at around $365 a share. There is about $100 a share of value in the pipeline at current levels. So the upside from here comes down to TTR revenue growth and the pipeline.

What is your other large-cap recommendation?

Richter: Vertex Pharmaceuticals looks interesting after a pullback in its shares. We expect the company's launch of Alyftrek in cystic fibrosis will do well over time. Pain is another growth driver, although it is debated. Vertex hasn't yet achieved broad reimbursement for Journavx, its acute pain medication, and we anticipate a more meaningful revenue contribution later this year after the third major pharmacy benefit manager comes online.

We think the market is overlooking the buildout of a third vertical in kidney and autoimmune disease. Vertex acquired Alpine Immune Sciences last year and will have initial Phase 3 data in the first half of 2026 from povetacicept, a dual APRIL/BAFF inhibitor [reducing the production of autoantibodies] in IgA nephropathy. This is a $20 billion market opportunity. Vertex's treatment is potentially best-in-class with a once-a-month auto-injector treatment.

Among smaller stocks, I want to highlight Denali Therapeutics ahead of its potential first drug approval in Hunter syndrome by Jan. 5. It leverages the company's technology platform, designed to transport molecules across the blood-brain barrier. While Hunter syndrome represents a relatively small commercial opportunity, Denali has a clinical and preclinical pipeline of assets leveraging this technology, including for Sanfilippo syndrome -- where the FDA has granted an accelerated approval path -- Fabry disease, Parkinson's disease, and Alzheimer's disease, among others. Denali plans to bring one to two candidates to clinical development each year.

And your last name?

Richter: Enliven Therapeutics is a small, targeted oncology company with a lead asset to treat the blood cancer CML [chronic myeloid leukemia]. This is a more than $9 billion U.S.-branded [drug] market with limited recent drug entries outside of Novartis' Scemblix, which launched in the front-line setting [as a first-line treatment] last year. We believe Enliven's drug, entering Phase 3 development, is well positioned to follow Scemblix in earlier lines given its strong data. We also see M&A optionality for this name.

David, what do you like?

Risinger: We don't see significant mispricings among large-caps, but I am particularly enthusiastic about four smid-cap companies. Shares of one of them, Centessa Pharmaceuticals, ran up recently.

We expect Centessa to be a leader in the field of narcolepsy. A new class of drugs, orexin agonists, has generated transformational efficacy in keeping patients awake. Centessa has data suggesting that its drug candidates can offer best-in-class potential. Its first-generation candidate, ORX750, is aimed at treating three types of severe narcolepsy -- type I, type II, and idiopathic hypersomnia. With its next-gen candidate, ORX142, management plans to pursue indications in neurological and neurodegenerative disorder patients to help them with wakefulness and cognition. A preclinical candidate, ORX489, is in development for the treatment of neuropsychiatric disorders.

The stock has gained around 40% this month. What ignited the rally?

Risinger: Centessa shares traded up significantly this month due to competitors' disclosure of orexin agonist candidate data at the World Sleep Congress in early September that further validated the efficacy and safety of this new class of wakefulness drugs. In addition, after observing Alkermes' and Takeda Pharmaceutical's orexin agonist results, Centessa's CEO reiterated his expectation that ORX750 has best-in-orexin-class potential.

Next, I mentioned Metsera. Wall Street underappreciates the company's monthly injectable GLP-1, monthly injectable amylin, daily oral peptide, and peptide-manufacturing scale advantages relative to the competition. Metsera's monthly GLP-1 requires less than one-tenth of the annual API [active pharmaceutical ingredient] of Lilly's tirzepatide, and its daily oral peptide requires less than one fifth of the API of Novo's 25 milligram oral semaglutide.

[Editor's note: Pfizer announced on Sept. 22 that it would buy Metsera for up to $7.3 billion, including milestone payments. Metsera rose more than 50% on the news. In light of the deal, Barron's asked Risinger for another stock pick. He wrote the following in a follow-up email: We are bullish on XOMA Royalty, a biopharma royalty company that is creatively driving shareholder value by acquiring capital and drug royalty rights.

XOMA has a large legacy portfolio, and our investment thesis is that the company's growth outlook, new product catalysts, and future operating leverage are underappreciated by the market. The next potential major stock catalyst is top-line results for Rezolute's RZ358 in congenital hyperinsulinism, likely by the end of 2025. XOMA holds high-single-digit to midteens royalty rights on RZ358, which management believes could become its largest royalty stream if RZ358 generates compelling results.]

What else excites you?

Risinger: Roivant Sciences has a portfolio of assets that we believe is undervalued. We hope positive Phase 3 trial results for brepocitinib, for treatment of a rare skin disease called dermatomyositis, will set the stage for Roivant to return to generating revenue starting with a launch in early 2027. Roivant also has several other assets, including more than $4 billion in net cash on its balance sheet, a 57% stake in Immunovant, additional pipeline candidates, and pending royalty claims on Covid vaccines sold by Moderna and Pfizer. [Editor's note: Roivant posted positive Phase 3 results on Sept. 17, after this Roundtable was held. Following the positive trial results, Risinger reiterated his Outperform rating on the stock and raised his price target from $18 to $22. The stock recently traded around $15.]

Lastly, I'll touch on a smaller-cap company, Oruka Therapeutics, which is developing ultra-long-acting candidates for psoriasis and related skin diseases. The stock has significant upside potential. Its two key drugs are ORKA-001, an injectable IL-23 [Interleukin-23] treatment designed to offer advantages over AbbVie's Skyrizi, and ORKA-002, an IL-17 AF with potential advantages over UCB's Bimzelx. In the base case, ORKA-001 will demonstrate similar efficacy to Skyrizi, and less frequent dosing than Skyrizi's quarterly maintenance injections. In the bull case, ORKA-001 will demonstrate better efficacy than Skyrizi and have annual maintenance dosing. We anticipate compelling ORKA-001 Phase 2a results in 2026.

Jared, let's hear from you.

Holz: My first recommendation is Teva Pharmaceutical Industries, which I have pitched in the past. The stock continues to suffer from a lack of definition around the business. Half the business is generic drugs, and the other half is branded biotechs.

The thesis is simple. Over the next three to five years, there is going to be a continued acceleration of the biotech aspect of this company. That should give it a higher multiple than seven times forward earnings. The stock is basically trading like a distressed equity when the risk factors are similar to other large-cap pharma companies -- namely, loss of patent protection, drug pricing issues, and such. Most of the risks seem priced in.

One of Teva's largest branded drugs, Austedo, is a VMAT2 inhibitor used to treat involuntary movements, like Neurocrine Biosciences' Ingrezza. They will be in the next wave of drugs impacted by the Inflation Reduction Act's Medicare price negotiations. Even so, Teva will have stable or growing earnings over the next few years. You don't need a pie-in-the-sky sort of thesis to get 30% or 40% upside in the next year.

Why does Teva still get such a low multiple? Are investors focused on some of the strategic errors made under prior management?

Holz: There may be some investor PTSD around the stock that isn't deserved. But it also trades in an odd space that doesn't fit with the rest of the industry.

My next name is Edwards Lifesciences. The panel hasn't really touched on medical devices, Edwards' specialty. This is a cardiovascular company with roughly 10% top-line growth. Edwards is the preeminent player in TAVR [transcatheter aortic valve replacement]. It is moving into other areas of cardiovascular disease, such as mitral valve replacement and tricuspid valve replacement. Both areas are just starting to find their footing as new revenue-generating assets for the company. As the Street moves away from focusing on TAVR, a business that has decreased as patients have gotten treated over the past decade, and into mitral and tricuspid, there will be a growthier aspect to this business that hasn't been apparent over the past couple of years. The stock is out of favor and hasn't moved much over the past couple of years.

My third idea is NewAmsterdam Pharma. The company has $3 billion in market value and could generate annual revenue well in excess of $3 billion. You aren't paying up for that revenue.

What does NewAmsterdam do?

Holz: The company has a drug that treats elevated LDL cholesterol. The data to date has been excellent. We are awaiting results on cardiovascular outcomes, which would support broader use and drive significant uptake. The Street is mixed on whether or not the drug will show sufficient benefit in this regard but I think the trial results will be good enough. This is an oral small molecule that patients can use in addition to statins, or in place of statins for those not on statins already.

Then there is NewAmsterdam's drug pipeline, which doesn't get talked about too often. The company is exploring the use of its drug for early-onset Alzheimer's, which could be interesting as we move into 2026. I expect a lot more interest in Alzheimer's treatments in general next year. NewAmsterdam has an asset in Phase 2 testing that isn't reflected in the company's valuation. The company could be a takeover candidate, but a deal isn't necessary to get an increase in the valuation.

Why will there be more interest in Alzheimer's next year?

Holz: We will start getting data later this year from a Novo Nordisk trial evaluating whether semaglutide can slow cognitive decline. Also, Eli Lilly's Trailblazer-Alz 3 trial [testing donanemab in preclinical Alzheimer's patients] is going to read out. There will be more subcutaneous use of Biogen's Leqembi over time. This has been an impaired therapeutic category for years, but is starting to turn.

My fourth idea is Vaxcyte, which is starting to get interesting, although it isn't for everybody. This was a $12 billion [market cap] company a year ago. Now the market cap is down to $4 billion. Vaxcyte had a few missteps with its pneumococcal-disease vaccine in the pediatric population, the larger segment of the market. It is retooling that trial as we speak.

RFK Jr. is probably responsible for a third to half of the demise in this stock. If his status changes, it may go up 30% on that news alone. Therapeutically, the company continues to advance its pneumococcal vaccine in children. The data in trials involving adults has been great. That is a $1 billion to $2 billion market. Given the market cap, you are paying a fair price.

Chris, you aren't a stockpicker, but are there any stocks that your Raymond James colleagues recommend that you would care to highlight?

Meekins: I'll highlight three things from different Raymond James analysts. John Ransom, who covers healthcare services, likes CVS Health. The company has new management and has been one of the few bright spots in managed care this year. But the stock is still selling for only about eight times estimated earnings. John sees a margin-recovery story over the next three years on the insurance side of the business because CVS' Aetna business has been a laggard. The expected recovery is part of a broader theme we're seeing in managed care. The Medicare Advantage business has taken it in on the chin in the past two or three years, and is probably turning a corner.

Jayson Bedford, who covers medical devices, likes ICU Medical. The stock's recent performance doesn't reflect the fact that underlying business momentum is improving. [ICU shares are down about 23% year to date.] The company, which develops and manufactures medical devices for critical care and infusion therapies, has multiple new product launches and ongoing efforts to optimize its cost structure. It has been hit harder on tariffs than most other names in medtech. Our team sees an opportunity.

Lastly, Andrew Cooper, who covers life sciences tools, likes QuidelOrtho, which sells diagnostic tests and related products. Respiratory-disease season is approaching. The stock sells for just seven times 2025 Ebitda [earnings before interest, taxes, depreciation, and amortization]. He sees a lot of opportunities for growth.

All these names are worth watching as part of the broader themes we see as we head into 2026.

Jared, you mentioned the problems with Medicare Advantage, which leads to a question about UnitedHealth Group, whose Medicare Advantage billing practices have come under federal investigation. The trouble at UnitedHealth has been one of the biggest stories of the year in healthcare investing, due to the magnitude of the selloff in its shares, which were down more than 50% at one point, and the fact that the company's business touches just about every American in one way or another. New leadership is promising low to moderate earnings growth next year, with better growth thereafter, but the company has lingering issues. Most of you don't cover the stock, but what can we expect from UnitedHealth now?

Meekins: At the low, around $250, the stock was stupid cheap. Now, at $350, investors are paying a pretty high multiple for a growth recovery story. Stephen Hemsley, the former CEO who was brought back to lead UnitedHealth, seems to be resetting the company and setting manageable expectations. United looks to be in a more favorable position than people had thought, and Medicare Advantage rates are likely to be more favorable in the future. This is a company that has the resources to be effective. The insider buying we saw when the stock hit its lows indicated the team's confidence in the future.

Jared, what are your thoughts?

Holz: It is an execution story at this point, as the company kind of reinvents itself with a number of difficult-to-predict crosscurrents in the background. Today the stock is trading in line with, or perhaps at a slight premium to, the market multiple. It looks like a value stock because the chart is terrible, but earnings have been reset to such a degree that I am not sure you aren't getting such a good deal at this price. It is a great trading stock. I am not sure I would want to be in it long term.

Meekins: I want to add that I am not worried about the investigations or policy stuff. Worst case, UnitedHealth will be fined, but the company will be fine.

Before we adjourn, a final question: What will next year's healthcare roundtable focus on?

Richter: We'll be heading into the midterm elections, so the policy conversation will continue. Alzheimer's treatments will be an important theme, as Jared mentioned -- especially early-onset Alzheimer's, as we are seeing subcutaneous formulations enter the market.

Another theme will be a focus on cardiovascular disease. We will be starting the new year with data on medications targeting Lp(a) [lipoprotein(a)]. We also spoke to the themes of obesity, and China innovation from 2025 carrying on into 2026. And hopefully, we will be talking about new innovation cycles.

Meekins: You're right about the midterms. But a policy person will have less to say on this roundtable a year from now, because broader macroeconomic issues will probably weigh more heavily on the market than regulatory decisions. We will get a lot of clarity on Most Favored Nation pricing, and implementation of the Big Beautiful Bill will be under way. We will have a better idea of what the courts allow, and don't allow, regarding restrictions on the presidency. At the FDA, we will have an entire year of additional information on approvals. There will be a lot more certainty in healthcare than there is today.

Risinger: Hopefully, we will be talking about a sector that has had a better year. Healthcare took a lot of arrows in 2025. With interest rates coming down, that will benefit smid-cap biotech. And some of the overhangs, such as drug pricing and the significant FDA uncertainty, will lift. We may look back at 2025 and say it was a bottoming period for healthcare stocks due to the challenges the industry has faced this year.

Jared, we'll give you the last word .

Holz: As I mentioned, Alzheimer's categorically is becoming more interesting for investors, whether we're talking about current or new players in the field. In obesity treatments, we will see who is real and who isn't in the next 12 months among a host of large-cap pharma and biotech players. Right now it is a two-player market. I expect it will remain predominantly two players, but there could be some assets that wind up surprising to the upside.

We will be talking about the midterms, but we always start talking about the next election cycle two years prior. Lastly, every big-time banker on Wall Street is predicting a massive wave of M&A, not just for healthcare but across the board. Assuming this comes to fruition, what will consolidation look like in healthcare?

Good question. We'll take it up next year. Thanks, everyone.

Write to Lauren R. Rublin at lauren.rublin@barrons.com and Josh Nathan-Kazis at josh.nathan-kazis@barrons.com

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September 26, 2025 12:34 ET (16:34 GMT)

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