From Morning Watchlist <[email protected]>
Subject Wall Street Is Warming Up to Health Care Again
Date December 29, 2025 2:05 PM
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A quiet rotation is turning into a broader uptrend across the
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Dear Fellow Investor,

HEALTH CARE’S QUIET ROTATION IS BROADENING: 3 STOCKS POSITIONED TO
BENEFIT

Health care is quietly stepping back into the spotlight, and the most
interesting part is that it is not behaving like a purely defensive
trade.

Yes, health care has historically served as a steadier corner of the
market during periods of uncertainty. But the recent shift has a
different feel: the sector has flashed a rare historical signal, one
that has not appeared often over the last few decades. When this type
of setup has emerged in prior cycles, health care has often gone on to
deliver meaningful relative outperformance.

The second notable detail is _how_ the move has developed. For much of
the year, gains were concentrated in a relatively small cluster of
high-quality leaders, exactly the kind of narrow participation that
can make a sector rally look stronger than it really is. Narrow
leadership can persist, but it is also vulnerable: if the leaders
stall, the entire theme can fade quickly.

That is why the current phase matters. What began as a “stealth
rotation” is now broadening. More companies are joining the uptrend,
and investor attention is expanding from a handful of familiar winners
to a deeper bench across the industry. In market terms, improving
breadth is often what turns a short-lived move into a more durable
trend because it suggests the bid is not reliant on one or two names
carrying the whole group.

For long-term investors, this kind of broadening can be a meaningful
tell. When participation improves, it can indicate that the market is
starting to price in better fundamentals across the sector:
stabilizing demand, a more constructive earnings outlook, improving
visibility, or even a shift in how investors value cash flows. And in
health care specifically, broadening participation can also reflect a
rotation toward businesses with recurring demand drivers that are less
sensitive to the economic cycle.

With that backdrop, here is a look at three health care stocks that
appear well positioned to benefit from a stronger, broader sector tape
- supported by buy ratings from major firms and constructive implied
upside to price targets.

-------------------------

COMPANY: AGILENT TECHNOLOGIES (SYM: A)
PICKS-AND-SHOVELS EXPOSURE TO LIFE SCIENCES AND DIAGNOSTICS
RECENT PRICE: $141.74
PRICE TARGET: $168.08
FIRMS WITH BUY RATING: MORGAN STANLEY, GOLDMAN SACHS, UBS

Agilent operates as an applications-focused provider to the life
sciences, diagnostics, and applied chemical markets. Its business
spans three segments, Life Sciences and Applied Markets, Diagnostics
and Genomics, and Agilent CrossLab, giving it broad exposure to the
tools and services that support research, testing, and clinical
workflows.

From an investor perspective, Agilent is often viewed as a
“picks-and-shovels” way to participate in long-run health care and
biotech innovation. Instead of betting on the success of a single
drug, it sells essential instruments, consumables, and services that
are used across many customers and end markets. In many cycles, that
positioning can translate into a more resilient demand profile,
especially when the company has a meaningful installed base and
recurring service or consumables revenue.

Why might it benefit as the rotation broadens? When breadth improves
in health care, it is often because investors are looking beyond
headline drug makers and into the ecosystem that supports the entire
innovation pipeline. As confidence improves around research activity,
diagnostics demand, or clinical testing volumes, the market frequently
re-rates the enabling platforms that sit behind the scenes.

Analyst support from multiple major firms suggests confidence in the
company’s ability to execute through the next phase. The implied
upside to target also indicates that, even after recent strength in
parts of health care, some on the Street still see valuation room if
fundamentals and sentiment continue to firm.

What to watch into 2026: order trends, lab spending cycles, and
whether the mix continues to favor higher-value workflow solutions,
factors that can influence both growth and margin structure.

-------------------------

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-------------------------

Company: ABBVIE (SYM: ABBV)
A SCALE BIOPHARMA STORY WITH MULTIPLE FRANCHISES
RECENT PRICE: $223.58
PRICE TARGET: $248.67
FIRMS WITH BUY RATING: HSBC, Piper Sandler, J.P. Morgan

AbbVie is a research-based biopharmaceutical company with a broad
global portfolio spanning immunology, oncology, neuroscience, eye
care, virology, and more. Investors most commonly associate AbbVie
with major immunology therapies, historically Humira and,
increasingly, newer therapies such as Skyrizi and Rinvoq, alongside a
wide set of other branded medicines and aesthetics products.

In a broadening health care tape, AbbVie can stand out for a different
reason than tools companies: it combines scale, cash flow, and
diversified end markets. When investors re-engage with health care
beyond the “defensive” framing, large, profitable biopharma
companies with multiple growth drivers and strong commercial execution
often re-enter the conversation as core holdings, not just tactical
positions.

The appeal is typically a blend of durability and optionality:

*
DURABILITY because demand for many therapies is not tightly linked to
GDP growth.

*
OPTIONALITY because successful drug franchises, label expansions, and
pipeline progress can create upside that is not always reflected in
near-term numbers.

Analyst buy ratings across multiple firms suggest a constructive
outlook on AbbVie’s ability to sustain performance as its portfolio
evolves. The gap between the recent price and target is not extreme,
but it still implies further upside if execution and earnings
visibility remain strong.

What to watch into 2026: continued performance across key franchises,
competitive dynamics in major therapeutic areas, and any pipeline
catalysts that could expand the company’s growth profile.

-------------------------

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-------------------------

COMPANY: THERMO FISHER SCIENTIFIC (SYM: TMO)
A CATEGORY LEADER ACROSS THE LIFE SCIENCE STACK
RECENT PRICE: $567.36
PRICE TARGET: $631.80
FIRMS WITH BUY RATING: GOLDMAN SACHS, MORGAN STANLEY, BARCLAYS

Thermo Fisher is one of the most strategically important companies in
the life sciences ecosystem. It provides solutions across analytical
instruments, specialty diagnostics, lab products, and biopharma
services, selling everything from research consumables to
sophisticated instrumentation and services supporting drug development
and manufacturing.

Thermo Fisher’s breadth matters. In a sector rotation that is
broadening, businesses with multiple demand drivers can be especially
attractive because they are not dependent on one narrow pocket of the
industry. The company’s segments span research and discovery,
clinical and diagnostic testing, and bioproduction services, areas
that can take turns leading depending on the cycle.

Analysts who like Thermo Fisher often point to a few structural
strengths:

*
SCALE AND CUSTOMER REACH: It is embedded across pharma, biotech,
academia, government, and industrial markets.

*
RECURRING DEMAND: Many product categories are consumables- or
service-heavy, supporting repeat purchases.

*
STRATEGIC POSITIONING IN BIOPHARMA SERVICES: Outsourcing trends and
the complexity of biologics manufacturing can support long-run demand
for specialized capabilities.

The implied upside to the target suggests analysts see room for
appreciation if the market continues to reward health care
“infrastructure” businesses as the rotation widens.

What to watch into 2026: biopharma funding and production trends,
research activity levels, and how management balances growth and
margin priorities across segments.

-------------------------

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-------------------------

_What other stocks do you have your eye on heading into 2026? What
other sectors of the market are you currently interested in? Hit
"reply" to this email and let us know your thoughts!_

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