Healthcare stocks as a group have not performed on par with broader equities this year. However, that doesn't mean investors should avoid the sector altogether. Many healthcare companies appear to be attractive bets for those willing to stay the course for the next five years (and even beyond that).
Let's consider these excellent candidates: CRISPR Therapeutics (CRSP 2.74%) and Vertex Pharmaceuticals (VRTX 1.69%), two innovative drugmakers. Here's why they are both buys heading into 2026.
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1. CRISPR Therapeutics
CRISPR Therapeutics, a gene-editing specialist, should have several catalysts next year that could jolt its stock price. First, the biotech could make commercial and clinical progress with Casgevy, a medicine for sickle cell disease and beta-thalassemia developed in collaboration with Vertex. Casgevy has not generated significant revenue yet due to its complex administrative process.
However, CRISPR expects significant growth for the therapy next year because it has spent the last two years ramping up third-party coverage and establishing a network of authorized treatment centers where Casgevy needs to be administered. And the two partners are conducting late-stage studies for Casgevy in patients ages 5 to 11 (it is currently approved for those 12 or older).
A label expansion would boost Casgevy's addressable market.
NASDAQ: CRSP
Key Data Points
Beyond this product, CRISPR should make significant progress in its pipeline elsewhere. Let's consider two promising candidates. First, there is SRSD107, a potential anticoagulant that the company is developing in collaboration with Sirius Therapeutics, a privately held biotech company. There are plenty of anticoagulants on the market, but they come with severe limitations, including heavy bleeding as a side effect, a frequent dosing schedule, and others.
CRISPR is looking to address these drawbacks with SRSD107. The medicine has performed well in phase 1 studies and has maintained its efficacy for up to six months, demonstrating potential for less frequent (twice a year) dosing. It is currently in phase 2 studies. The company will likely update investors on the medicine's progress throughout next year.
Second, it is also developing CTX112, which could target several cancers as well as autoimmune disorders. Encouraging progress with this program, which CRISPR Therapeutics could share by year's end and throughout 2026, could also help push the stock higher. The company has several other candidates in its pipeline and could have a much deeper lineup of approved treatments within five years.
There is always the risk of clinical and regulatory setbacks, especially with smaller biotechs like CRISPR. However, the company is proving to be highly innovative. It seeks to develop transformative therapies in areas with high unmet needs.
That's what it did successfully with Casgevy. CRISPR Therapeutics' shares could jump over the medium term if it can reproduce that success elsewhere.
2. Vertex Pharmaceuticals
Vertex Pharmaceuticals has not performed well this year. The market looks increasingly worried that it is too dependent on its core cystic fibrosis (CF) franchise while newer products in other areas (like Casgevy) aren't yet making a meaningful impact on its financial results.
However, being a one-trick pony isn't so bad, as long as it's a really good trick. Vertex's lineup of CF treatments continues to generate steady revenue and earnings for the biotech.
In the third quarter, revenue increased by 11% year over year to $3.08 billion. Net earnings per share jumped by 4.7% year over year to $4.20. It still doesn't look likely to encounter any significant competition in this niche that it has dominated for over a decade.
Vertex Pharmaceuticals should have plenty of time to ramp up sales of Casgevy and Journavx, another new therapy, indicated to treat acute pain, that earned the green light in January.
NASDAQ: VRTX
Key Data Points
And Vertex could have even more new launches within a few years. The company's zimislecel, a medicine for Type 1 diabetes, is making significant progress. Management is planning to submit regulatory applications next year.
The biotech has a pair of promising phase 3 studies for inaxaplin and povetacicept, which target APOL-1-mediated kidney disease and IgA nephropathy (also a kidney disease). There are no medicines approved that target the underlying causes of either of these conditions.
Vertex Pharmaceuticals also has several candidates in early-stage studies. The poor performance this year shouldn't scare off investors. The company's medium-term outlook remains intact, as it appears to continue dominating in its core therapeutic area, while making significant regulatory and commercial progress elsewhere.
