After underperforming broader equities over the past few years, will the healthcare sector finally rebound and deliver above-average returns from here on out? That's hard to say. Whatever the case, there are plenty of attractive healthcare stocks investors should consider buying and holding on to through the next five years and beyond.
Here are two candidates: Intuitive Surgical (ISRG 2.72%) and Vertex Pharmaceuticals (VRTX 1.75%).
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1. Intuitive Surgical
Intuitive Surgical faced challenges last year. High tariffs impacted its financial results, while it is seeing increased competition in the robotic-assisted surgery (RAS) market, a niche where it is a leader. Further, the company's guidance for the fiscal year 2026 wasn't as strong as the market wanted. However, even with potential near-term volatility, Intuitive Surgical's long-term outlook is strong. It operates in an underpenetrated RAS market and develops some of the leading robot surgery devices, including its famous da Vinci system, which helps surgeons perform minimally invasive procedures.
NASDAQ: ISRG
Key Data Points
Intuitive Surgical also benefits from a strong competitive advantage due to switching costs, as its devices are expensive enough that hospital systems won't want to replace them. It ended the fourth quarter with an installed base of 11,106, up 12% from the year-ago period. And as this number increases, so will procedure volume, an important growth driver for the medical device specialist. Intuitive Surgical's moat can help it stay ahead of the competition while also giving it flexibility to deal with tariffs, for instance, by leveraging its strong pricing power.
So, even with the challenges it faces, Intuitive Surgical's stock is a top pick this month for buy-and-hold investors given its long-term prospects, despite its 13% decline over the trailing-12-month period.
2. Vertex Pharmaceuticals
Vertex Pharmaceuticals has several catalysts on the horizon that could boost its share price and help it build a strong foundation for the future. Although the biotech has been hugely successful in its core therapeutic area -- Vertex Pharmaceuticals markets the only drugs in the world that treat the underlying causes of cystic fibrosis (CF) -- the company is now expanding into new territories. Vertex plans on submitting regulatory applications for zimislecel, an investigational therapy for type 1 diabetes, this year.
NASDAQ: VRTX
Key Data Points
It will also have important late-stage data readouts. One will be for inaxaplin, an investigational therapy for APOL-1 mediated kidney disease, a condition for which there are no medicines that treat its underlying causes. It should also release top-line data for an ongoing clinical trial for povetacicept, a potential medicine for IgA nephropathy (a kidney disease).
Provided even one of those medicines proves effective, within a couple of years, Vertex's lineup will be larger, with its core CF franchise still driving strong top-line growth, and several newer products, including Journavx, a medicine for acute pain that earned approval last year, also contributing. That's why Vertex's shares look attractive this month.
