Healthcare Stocks Outlook 2025: Should You Invest?

Summary

Earn Your Leisure Podcast – Episode Summary

Episode Title: Healthcare Stocks Outlook 2025: Should You Invest?
Air Date: October 6, 2025
Hosts: Rashad Bilal and Troy Millings
Notable Guests/Experts: Healthcare Market Commentator, Healthcare Sector Expert, Financial Analyst

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Overview

This episode dives into the 2025 outlook for healthcare stocks, examining recent volatility, the impact of political and policy moves (e.g., tariffs, lawsuits), and how technological innovation—especially artificial intelligence (AI)—is poised to reshape the sector. The hosts and expert guests discuss which companies and trends to watch, highlight common investor mistakes, and provide practical advice on structuring a healthcare portfolio for the coming year.

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Key Discussion Points & Insights

1. Recent Performance of Healthcare Stocks

• State of the Market: The healthcare sector has experienced a “rocky road,” hindered by overseas pharmaceutical tariffs, high-profile lawsuits (notably concerning Ozempic), and shifting investor expectations ([01:59]).
• Investor Mistake: Attempting to compare or match healthcare returns to those from the tech sector has been a recurring error. The price bubble, notably in stocks like Eli Lilly, eventually led to corrections.
  • Quote:
    “One of the biggest mistakes was that sector trying to price in healthcare returns to match tech returns.” – Financial Analyst [02:45]

2. Tariffs and Policy Changes

• Tariffs on Overseas Pharmaceuticals: The Trump-era tariffs (up to 100% if manufacturing is not in the US) continue to affect select companies, pushing an incentive for U.S.-based production ([05:21]).
  • Quote:
    “The tariffs only go into effect at 100% if you're not building a plant inside of the United States...you’re trying to incentivize people to build infrastructure here.” – Healthcare Sector Expert [05:21]

3. Impact of Technology and AI

• AI’s Role in Healthcare: Both hosts and experts agree that every company will need an AI component, mirroring a decade-old shift where “every company became a tech company.” This opens the door for swift biotech and operational innovations ([05:00]).
  • Quote:
    “Last week he [Vlad Tenev] said every company is going to be an AI company because it has to have an AI component, and healthcare is not excluded from that.” – Healthcare Sector Expert [05:00]

4. How to Invest in the Sector

• Domestic Focus: Experts advise focusing on U.S. healthcare companies that benefit from current policy priorities (XLV ETF top holdings: Eli Lilly, Johnson & Johnson, ABBV, UnitedHealth, Abbott, Merck, Stryker, etc.) ([05:21]-[06:34]).

  • Advice:
    “Go look up these healthcare ETFs and see what allocations...keep an eye on the top five in XLV and put [them] on your watch list.” – Healthcare Sector Expert [06:21]

• Select Stocks to Watch:

  • *“The only three I like in the space: Eli Lilly, ABBV, and Stryker. You're not [in] United Healthcare until I get a new CEO and this trial is over with.” – Financial Analyst [06:52]
  • CVS is also mentioned as a solid performer, but the focus remains on companies with strong portfolios and leadership ([07:45]).
  • Leadership and company fundamentals (policy support, innovation) are key filters ([08:07]-[08:28]).

• Realistic Return Expectations:

  • Seek stability, not explosive growth:
    “Will next year be a little bit better? Yes, but I don't think you should expect 35 to 45% return in healthcare at all.” – Financial Analyst [04:10]

5. Broader Investment Considerations

• Healthcare: A Portfolio Staple?
  • Given its massive share of U.S. government spending, healthcare is recommended as a core portfolio sector, but with selectivity and tempered expectations ([07:54]-[08:07]).
    • Quote:
      “We spend all this money on healthcare, but we are one of the sicker major countries in the world.” – Financial Analyst [08:07]

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Notable Quotes & Memorable Moments

| Timestamp | Speaker | Quote | |-----------|------------------------|---------------------------------------------------------------------------------------------------------------| | 02:45 | Financial Analyst | “One of the biggest mistakes was that sector trying to price in healthcare returns to match tech returns.” | | 04:10 | Financial Analyst | “Will next year be a little bit better? Yes, but I don't think you should expect 35 to 45% return in healthcare at all.” | | 05:00 | Healthcare Sector Expert| “Every company is going to be an AI company because it has to have an AI component, and healthcare is not excluded from that.”| | 05:21 | Healthcare Sector Expert| “The tariffs only go into effect at 100% if you're not building a plant inside of the United States.” | | 06:21 | Healthcare Sector Expert| “Go look up these healthcare ETFs and see what allocations...keep an eye on the top five in XLV and put [them] on your watch list.” | | 06:52 | Financial Analyst | “The only three I like in the space: Eli Lilly, ABBV, and Stryker. You're not [in] United Healthcare until I get a new CEO and this trial is over with.” | | 08:07 | Financial Analyst | “We spend all this money on healthcare, but we are one of the sicker major countries in the world.” |

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Timestamps for Important Segments

• [01:59] — Overview of healthcare stocks' recent struggles (lawsuits, tariffs, “bumpy road”)
• [02:45] — Mispricing healthcare vs. tech sector; Eli Lilly’s rise and correction
• [04:10] — Realistic returns for 2025 and sector expectations
• [05:00] — AI’s coming “disruption” of health sector
• [05:21] — Tariff policy and its impact (U.S.-centric production)
• [06:21] — How to select stocks; review of leading U.S. healthcare companies and ETFs
• [06:52] — Top three healthcare stocks to watch: Eli Lilly, ABBV, Stryker
• [07:45] — Shout-out to CVS as a consistent, reliable performer
• [08:07] — Conversation about healthcare as a mandatory portfolio allocation, but with realism

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Conclusion

The panel urges investors to approach healthcare stocks differently from technology investments, emphasizing the sector’s steadiness and policy rooting over spectacular returns. Focus should remain on U.S. giants with good leadership and government backing—namely Eli Lilly, ABBV, and Stryker, with ETFs as a practical entry point. Technological (especially AI-driven) innovation and shifting policy (such as tariffs) will be key drivers in the year ahead, but expectations for outsized returns should be tempered.

Final advice:
“Invest in the best, go with companies with strong policy and leadership, and keep your return expectations grounded for healthcare in 2025.”

Transcript

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[Healthcare Market Commentator]

It's been, it's been a very rocky road so far for healthcare stocks. So do you think that the sector will perform better next year? We could talk about the terrorists in phases. I know that's overseas pharmaceuticals is one of the things that Trump put tariffs on. So I believe it's 50 on overseas pharmaceutical, 100, 100 on overseas pharmaceutical, and then of course the Ozempic lawsuit. So there's been a lot of high profile things that have hurt healthcare stocks. Don't talk about Eli Lilly a lot, but yeah, what's the, what's the forward projection for healthcare stock?

[Financial Analyst]

I think the healthcare sector will be okay, but one of the biggest mistakes was that sector trying to price in healthcare returns to match tech returns. So if you look even at Eli Lilly From 2021, which was at 201 78, it ballooned up to 972 53. I love Eli Lily dearly. I think it's one of the most important companies in healthcare. But if I had to ask you, just okay, is it more important than Nvidia, Microsoft Meta? The price gaps became too wide and I think they began to adjust to prices where they should be. Novos had their issues. We've always talked about investing into stocks that are domestic and not international first. So I think as a result the sector will be fine. But if you're looking for high price returns, the only places you really can turn to are bitcoin, which is the tech and then tech sectors and maybe some energy. Troy, we can talk about app lovin later. But I think all in all, Even with like UnitedHealthcare, the margin structures are dramatically different than a tech company. So I think it's a mistake at times to try and get the same kind of returns that that sector normally does not give. Will next year be a little bit better? Yes, but I don't think you should expect 35 to 45% return in healthcare at all.

[Healthcare Sector Expert]

Yeah, I don't think you should ever expect that type of return. If you're in the right place at the right time, it can happen. Healthcare is interesting. I think it's kind of one of these things where you have to see a breakthrough and it has to be something that has strong. Right. It has to be something with strong policy behind it. There's a lot of different variations or factors that go into making a healthcare stock something that is worth investing in. The interesting part is that AI is going to disrupt healthcare and so there could. Right. It could help it at scale and so we could see innovations in biotech. I think we're not, we're not far from that. Right. Like I talked about this yesterday where Vlad Tenev was saying that 10 years ago every company on the stock market is a tech company because it needs a tech component.

[Financial Analyst]

Yep.

[Healthcare Sector Expert]

And last week he said every company is going to be an AI company because it has to have an AI component and healthcare is not excluded from that. So innovation will happen how fast? I think it can happen quickly. And if you look at what this administration, especially when you talk about tariffs and that's even an interesting proposition in itself.

[Avis Representative]

Right.

[Healthcare Sector Expert]

Like the tariffs only go into effect at 100% if you're not building a plant inside of the United States. And so that's like, I mean you're trying to incentivize people to build infrastructure here from the farmer side. But if they do, then there are no tariffs. Right. For those companies. I think you focus on, if you're investing in healthcare, I think you're focusing on the American companies that have been leading, starting with Lily, Johnson and Johnson. I think the best thing to do. Right. And we talked about it last week, is go look up these, these healthcare ETFs and see what allocations. Right. If we look at the spider fund, XLV, Lily, Johnson and Johnson, Abbey, UnitedHealth, Abbott, Merck. I used to talk about Thermo Fisher all the time during the pandemic. We're talking about how we're going to get vaccines. And that business has gone out the window. Right. We talk about what happened, what's happened to Merck. You can, you can see as well. Yeah. American companies, if that is what the administration is leaning towards. Like I said, you have to have strong policy behind you. I would keep an eye on the top five in XLV and, and put on my watch list. I definitely. And then Striker. I think we could put Striker in there. Right?

[Financial Analyst]

Yeah.

[Healthcare Sector Expert]

That's always one of my favorites in terms of healthcare. Lily, for sure. But keep them on your watch list. Lily, obviously will be the leader. And that has a lot to do with not just the, the weight loss, drugs, I mean, their entire portfolio. But be mindful of the ones that are getting policy behind it.

[Financial Analyst]

The only three I like in the space, Eli, Lily, of course, ABBV and Striker. You're not United Healthcare until I get a new CEO and this trial is over with.

[Healthcare Sector Expert]

Oh, that trial.

[Financial Analyst]

Yeah, yeah, that.

[Healthcare Sector Expert]

Yeah, that's right.

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[Healthcare Sector Expert]

No.

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[Healthcare Sector Expert]

Okay.

[Healthcare Market Commentator]

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[Healthcare Sector Expert]

Darcy said. What about cvs? I. I've spoken highly about cvs and if you've invested in cvs, you saw great returns on that as well. I like CVS too.

[Healthcare Market Commentator]

So for. For people that, you know, obviously healthcare is the number one expenditure. The United States government, essentially the biggest industry in the world. Should people have healthcare as part of their portfolio?

[Financial Analyst]

Yeah, only Lily, ABBV and Strucker. The other part that's unfortunate is that we spend all this money on healthcare, but we are one of the sicker major countries in the world so it's not for our benefit per se. Do I think there's great leadership at Lily? Yes. Abbv?

[Healthcare Sector Expert]

Yes.

[Financial Analyst]

Stryker? Yes. I think even United Healthcare has a chance to turn itself around. But the mistake was because at one point when Novo was taken off, the thought was what if we can get healthcare returns to look like tech? And that's when you started putting out drugs and over qualifying them and overstating what the benefits could be without looking at the risk. And that destroyed Novo's business. So exposure is great for sure, but those are the three that I will lean into.

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