The healthcare sector continues to advance with technological breakthroughs and growing demand for medical services, creating opportunities for strong earnings growth in 2025 and beyond. With rising healthcare expenditures, an aging population and increasing disease prevalence, investors seeking growth can consider stocks with expanding margins in the medical space.

As 2025 progresses, the sector faces both opportunities and headwinds. While demographic trends and medical innovation support long-term growth, challenges such as potential government spending cuts, reduced funding and the expiration of insurance subsidies create uncertainty. Despite these hurdles, companies like Gilead Sciences, Inc. GILD, Option Care Health, Inc. OPCH and Aveanna Healthcare Holdings Inc. AVAH stand out as compelling picks. These companies have demonstrated resilience with impressive earnings surprise history, positioning them as attractive buys at the current levels for investors seeking potential long-term gains in this dynamic industry.

1-Year Price Performance – GILD, OPCH, AVAH, Medical Sector & S&P 500

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Let’s take a closer look at these three healthcare stocks and why they stand out.

Gilead Sciences: GILD is a dominant player in the HIV market, being the first to bring a single-tablet regimen to the market for its treatment and grab a formidable market share. Based in Foster City, CA, its efforts to bolster its oncology and virology franchises through internal pipeline development and collaborations are commendable.

Trading close to its 52-week high of $117.39 a share and with 14.55X forward earnings, Gilead Sciences stock remains well below its industry average of 45.36X. The life-saving drug-developing giant has a Value Score of B at present.

The company currently has a Zacks Rank #2 (Buy) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities for investors. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for GILD’s 2025 earnings is pegged at $7.86 per share, indicating 70.1% year-over-year growth. The estimate witnessed nine upward estimate revisions over the past month against only two movements in the opposite direction. Its 2026 earnings estimate indicates a further 5.1% increase. The consensus mark for 2025 revenues is pegged at $28.55 billion, while the same for 2026 suggests a 4% year-over-year increase.

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Gilead Sciences beat the consensus estimate for earnings in each of the past four quarters, with the average surprise being 19.5%.

Option Care Health: Headquartered in Bannockburn, IL, OPCH provides home and alternate site infusion services in the domestic market. It specializes in the administration of medications and care for patients with chronic and acute conditions.

While the company is trading pretty close to its 52-week high of $34.85 a share, its 22.46X forward 12-month earningsremain below its five-year median of 29.83X, indicating more upside potential. The company has a Value Score of B at present.

Option Care Health currently sports a Zacks Rank #1 and boasts a VGM Score of A, making it a compelling pick for investors. Its strong free cash flow margins and amplified shareholder returns due to repurchases reinforce its appeal as a high-growth healthcare stock.

The Zacks Consensus Estimate for its 2025 earnings is pegged at $1.70 per share, indicating 38.2% year-over-year growth. The estimate witnessed four upward estimate revisions over the past month against no movement in the opposite direction. Its 2026 earnings estimate predicts a further 12.7% jump. The consensus mark 2025 and 2026 revenues signal 8.3% and 9.2% year-over-year increases, respectively.

Option Care Health beat the consensus estimate for earnings in each of the past four quarters, with the average surprise being 15.9%.

Aveanna Healthcare:Based in Atlanta, GA, is a diversified home care platform company. It enables patients to receive care at home while reducing reliance on expensive hospital and skilled nursing facility stays. This also reduces the overutilization of resources in bigger facilities, making its business model scalable and sustainable.

Analysts anticipate Aveanna will soon achieve profitability and maintain it, driven by its cost-reduction strategies and strategic partnerships. The company has successfully adapted to the current reimbursement framework, a key advantage in the evolving healthcare landscape. Additionally, an improving labor market and its plan to implement a preferred payer strategy in medical solutions will position AVAH for continued growth and margin expansion.

AVAH’s forward 12-month sales of 0.35X remain below the industry average of 2.73X. The company has a Value Score of A at present.

Aveanna is scheduled to report fourth-quarter and full-year 2024 earnings next week. The Zacks Consensus Estimate for its 2024 earnings is pegged at 1 cent per share, indicating a 109.1% year-over-year improvement. The estimate remained stable over the past week. Its 2025 earnings estimate implies a massive jump to 7 cents per share. The consensus mark 2024 and 2025 revenues indicates 5.7% and 5.2% year-over-year increases, respectively. It has a Zacks Rank #2 and a VGM Score of A now.

Aveanna beat the consensus estimate for earnings in each of the past four quarters, with the average surprise being 135%.

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This article originally published on Zacks Investment Research (zacks.com).

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