Until recently, it had been a lackluster year for the healthcare sector. From high medical utilization squeezing insurers to structural cost pressures and valuation hangovers, medical stocks stocks have lagged much of the broader market this year. But there are some indications that the tide is turning.
The market’s increasingly concentrated tech focus continues to encourage the rotation into overlooked, defensive sectors like healthcare. At the same time, costs are beginning to stabilize, and the U.S. Food and Drug Administration (FDA) has been supportive of the biopharma pipeline, meeting review deadlines and accelerating pathways for novel therapies.
Over the past month, healthcare’s 5.4% gain only trails financials (at 6.36%) and tech (at 5.78%). While that broad turnaround has been welcomed by investors looking for a spark from the sector, the outsized performances of three stocks in particular have played a big role in the rally.
Eli Lilly: The Market Cap King of Pharma Continues Its GLP-1 Dominance
Big Pharma member Eli Lilly (NYSE: LLY) boasts the largest market cap by far of any healthcare company. At about $1 trillion, Eli Lilly is nearly double that of Johnson & Johnson (NYSE: JNJ), whose $562 billion market cap ranks second.
So when LLY outperforms, it has the ability to impact the broader sector as a whole.
Over the past month, shares are up around 11%, continuing a rally that’s seen the stock rise nearly 31% from its year-to-date (YTD) low on April 29. There are numerous catalysts driving Eli Lilly’s performance of late, but principally, the surge boils down to hypergrowth of its GLP-1 metabolic drug line.
The pharmaceutical company’s two flagship GLP-1 drugs, Mounjaro and Zepbound, continue to dominate the global market. In Q1 2026, sales of Mounjaro—which is most often prescribed to treat Type 2 diabetes—jumped 125% year over year (YOY) to nearly $8.7 billion. Zepound added more than $4 billion in sales, good for a YOY increase of around 80%.
On April 1, Eli Lilly received FDA approval for its oral GLP-1 pill, Foundayo. Because Foundayo is a pill and doesn't require strict food and water fasting restrictions like older oral biologics, it vastly expands Eli Lilly’s total addressable market for individuals who are looking to avoid injectable therapeutics.
So it was no surprise when the company blew past earnings expectations in Q1, with earnings per share (EPS) of $8.55 easily surpassing analyst expectations of $6.97, and revenue of $19.8 billion coming in higher than the forecasted $17.82 billion and 56% higher YOY.
But with a forward price-to-earnings (P/E) multiple of around 31, critics contend that LLY is trading at tech stock valuations rather than a defensive healthcare position.
Nonetheless, as the sector’s largest player, 25 of the 30 analysts currently covering Eli Lilly assign it a Buy or Strong Buy, with the stock receiving a consensus Moderate Buy rating. Meanwhile, the average 12-month price target for LLY implies approximately 10% additional upside.
Humana: Elective Treatments Moderate, Humana’s Margins Expand
Louisville-based insurance provider Humana (NYSE: HUM) has been one of the market’s biggest comeback stories in 2026.
At the end of Q1, the stock was down more than 70% from its all-time high in 2022.
That was mostly driven by a post-pandemic rush of medical treatment that saw Humana’s benefit ratio—the percentage of premiums spent on actual medical care—climb to an unsustainable 93% by the end of 2025.
But after hitting its five-year low on March 12, the stock has gained nearly 123%, including more than 18% over the past month.
After years of facing staggeringly high benefit ratios, Humana has seen elective treatments moderate, which in turn has widened the company’s margins. In Q1, net income margin stood at 2.99% versus negative 2.39% in Q4 2025 and 0.59% in Q3 2025.
Analysts were also impressed with Humana’s revenue growth, which in Q1 registered 23.47% after averaging just 10.17% over the preceding five quarters. Of the 28 analysts covering Humana, only nine have assigned it a Buy or Strong Buy rating. Overall, it receives a consensus Hold rating and an average 12-month price target that suggests a notable correction could be in the cards after HUM’s share price has run up in recent months.
DexCom: The Surging Diabetes-Monitoring MedTech
With a market cap of nearly $28 billion, DexCom (NASDAQ: DXCM) is the least recognizable stock on this list.
The company develops, manufactures, and distributes medical devices, including continuous glucose monitoring (CGM) systems for people with diabetes.
Its products are designed to provide near-real-time glucose readings, trend data, and alerts to help patients and clinicians manage insulin dosing and reduce the risk of hypoglycemia and hyperglycemia.
The stock had fallen on tough times, down nearly 55% from its all-time high in November 2021. But DexCom changed the narrative with a massive expansion into the non-insulin market.
Historically, CGMs were primarily targeted to intensive insulin users. But the company is aggressively moving into the broader Type 2 diabetes and preventative health markets.
At an American Diabetes Association conference in June, DexCom released landmark data from its CONNECT trial demonstrating that its flagship G7 sensor led to statistically significant reductions in blood sugar levels for adults with Type 2 diabetes who do not use insulin. At the same time, the company released a revamped app for Stelo, the first over-the-counter CGM designed specifically for pre-diabetics and Type 2 diabetics not on insulin, thereby opening up a massive new addressable market for the company.
DXCM is now up more than 27% since its YTD low on April 29, including a gain of more than 15% over the past month. DexCom has beat on EPS for four consecutive quarters, with revenue growth averaging 15.61% over that time versus the 1.97% growth it saw preceding that stretch.
Despite the recent run-up, analysts forecast nearly 19% additional upside over the next 12 months to go along with a consensus Moderate Buy rating.
The article "3 Stocks Doing the Heavy Lifting in Healthcare’s Rebound" first appeared on MarketBeat.
