UBS analysts have outlined a set of high-conviction healthcare ideas where they believed the market was underappreciating earnings durability and the scale of upcoming catalysts, focusing on stocks backed by differentiated views and proprietary insights.
In biotechnology, they identified Cogent Biosciences (NASDAQ:COGT) as their top pick, arguing the company offered scarcity value as a SMID-cap advancing two late-stage, potentially blockbuster assets. They pointed to strong Phase III data in gastrointestinal stromal tumors and indolent systemic mastocytosis and saw more than $3 billion in peak sales potential, supporting significant upside, particularly relative to the roughly $9 billion sale of Blueprint Medicines.
In managed care, the analysts favored Cigna Group (NYSE:CI), where they saw a clear valuation disconnect. They argued that pharmacy benefit manager reform risks had largely been absorbed and that the shift to a rebate-free model improved visibility. UBS expected a return to 10% to 14% earnings growth through 2027 and highlighted the stock’s discount to peers despite limited exposure to government reimbursement risk, alongside the potential resumption of share buybacks.
Within healthcare services, CVS Health Corp (NYSE:CVS) was framed as a recovery story with improving medium-term growth visibility. The analysts expected double-digit earnings growth over the coming years, viewing near-term pressures as transitory and recent share price weakness as an attractive entry point as regulatory risks eased.
For pharmaceuticals, Merck & Co Inc (NYSE:MRK, XETRA:6MK) was highlighted as a core holding that remained underowned. The analysts believed investor caution around Keytruda’s loss of exclusivity had created an opportunity, with pipeline strength and upcoming catalysts likely to support earnings and drive a re-rating toward peer multiples.
In SMID-cap specialty pharma, United Therapeutics Corporation (NASDAQ:UTHR) was seen as offering asymmetric upside, supported by durability in its pulmonary arterial hypertension franchise and additional potential in idiopathic pulmonary fibrosis. UBS modelling suggested revenues could come in meaningfully above consensus if upcoming clinical milestones were delivered.
Finally, in SMID oncology, CG Oncology (NASDAQ:CGON) was identified as an underappreciated name, with analysts arguing its lead therapy could become best-in-class in non-muscle invasive bladder cancer. They pointed to multiple upcoming catalysts that could expand the addressable market and drive a re-rating.
Overall, UBS analysts framed the basket as a balanced approach across healthcare, combining higher-risk, catalyst-driven biotech with more defensive, cash-generative names, where valuations did not fully reflect underlying earnings potential or pipeline progress.