Looking for great stocks to be had at a bargain? Even though broader equities have performed well this year, there are companies, particularly in sectors that haven't kept up with the rest of the market, that look affordable at current levels. One such sector is healthcare.
Two leading medical stocks that appear reasonable at current levels are AbbVie (ABBV 0.74%) and Merck (MRK 0.21%). The former has actually beaten the market in 2025, while the latter is in the red year to date. However, looking ahead to 2026, both drugmakers are attractive stocks to buy.
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1. AbbVie
As the saying goes, what doesn't kill you makes you stronger. That may apply to AbbVie, which lost patent exclusivity for the best-selling medicine in the industry's history, immunology drug Humira, in 2023.
AbbVie quickly returned to top-line growth, though. The company now has a more diversified lineup of products and is less dependent on a single medicine for sales growth. To be clear, some products in its lineup still do much of the heavy lifting. That's particularly the case with Skyrizi and Rinvoq, the heirs to Humira's immunology empire.
Even so, AbbVie is now an overall healthier and less risky company, especially since it won't have to deal with patent cliffs for any major products at least through 2030. That grants the healthcare giant plenty of time to plan for the future. AbbVie has been making strategic moves, advancing key products through the pipeline, and securing important licensing deals and acquisitions to bolster its business.
NYSE: ABBV
Key Data Points
One of the company's goals is to diversify even more by making a strong push into other therapeutic areas, including oncology. AbbVie has several notable pipeline candidates in this niche, including ABBV-969, which is being developed to treat metastatic prostate cancer, and ABBV-514, targeting lung cancer and neck cancer, among others.
AbbVie has also made a move to join the fast-growing weight loss market through a licensing deal with Denmark-based Gubra A/S for an investigational weight loss medicine, GUB014295. Over the next five years, AbbVie could make significant progress in its pipeline and regulatory efforts while continuing to generate steady revenue and earnings.
Lastly, the drugmaker remains one of the better dividend stocks on the market. AbbVie is a Dividend King. That title applies to companies that have increased their dividends annually for at least 50 straight years. AbbVie's long streak speaks volumes about the resilience of its business.
Amid all that, its stock looks like a bargain, trading at 15.9 times forward earnings, while the average for the healthcare sector is 18.3, and the S&P 500's is 22.6. AbbVie is a fantastic dividend stock to consider heading into 2026.
2. Merck
Merck's two main franchises are under threat. The company's HPV vaccines, Gardasil and Gardasil 9, have experienced substantial declines in sales this year primarily due to lower demand in China. Elsewhere, Merck's cancer medicine Keytruda, which accounts for a significant percentage of its revenue, may face intense competition, including biosimilars, in the next five years. The forward-looking market isn't happy with the company's medium-term outlook.
However, Merck isn't going down without a fight. The company has new approvals and pipeline candidates that should help it mitigate lower sales from its current key franchises.
Consider how Merck is resurrecting its vaccine business. Last year, it earned approval for Capvaxive, a pneumonia vaccine that showed promise due to its potential to target a broader patient population than its competitors. It has since made strong commercial headway. In the third quarter, it generated $244 million in sales.
NYSE: MRK
Key Data Points
Merck also recently announced the acquisition of Cidara Therapeutics, a biotech company developing a highly promising antiviral drug that could provide long-lasting protection against the flu in patients, including the elderly and those who are immunocompromised. There is still a need in this niche, considering flu vaccines are typically not very effective. With these moves, Merck aims to strengthen its vaccine business.
Then there is Winrevair, a medicine for pulmonary arterial hypertension that earned the green light last year and is seeking important label expansions. Some analysts have estimated that it could generate about $6 billion in sales by 2030.
By the way, a new subcutaneous formulation of Keytruda also appears highly promising, with the potential for $7.6 billion in sales by 2030, according to some projections. Additionally, there are many more candidates in the pipeline. Merck is also a solid dividend stock that has increased its payouts by 93.8% over the past decade.
Lastly, the company's forward price-to-earnings (P/E) looks more than reasonable at 10.5. Merck may be down, but investing in the stock today and holding onto it for the long term could yield terrific returns.
