2 Value Stocks to Buy in Healthcare (And 1 to Avoid)
Healthcare is supposed to be the “safe” play. But right now, not every healthcare stock is offering the same deal. Some look stable on the surface … and that's exactly the problem.
I think there are three names worth paying attention to right now that illustrate this dispersion. According to our Zen Ratings system, two score an A overall and an A in Value. One scores a C across the board.
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Here are the names I’m watching right now in healthcare.
The One to Avoid: Johnson & Johnson (NYSE: JNJ)
On paper, JNJ looks like the obvious buy. Household name. Steady cash flows. Beloved by dividend investors for its decades of dividend increases.
But the stock just surged roughly 60% since mid-2025. And when you look at what you're actually paying for, the picture gets more complicated.
The company is executing fine. The problem is structural. The core investment debate on JNJ is essentially a tug-of-war: accelerating growth in its new portfolio pulling against the massive Stelara patent cliff and unquantifiable talc litigation overhang.
On the litigation side, there are over 67,000 talc-related lawsuits outstanding, and multiple failed bankruptcy resolution attempts have pushed the company into costly, unpredictable jury trials. That's not a minor footnote … It's more like a valuation ceiling. And with JNJ scoring a C according to our Value Component Grade, we’re coming up against that ceiling now.
Click here to see all of JNJs Component Grades
You're paying a premium for a mature business that could continue to face structural headwinds. It’s not just a value problem: JNJ scores a C in Growth as well right now … which is why it sits on my “avoid” list right now.
Value Buy #1: Bristol-Myers Squibb (NYSE: BMY)
BMY, on the other hand, looks broken from the outside. Patent cliffs on flagship drugs Eliquis and Opdivo. Cautious guidance. Earnings misses. Wall Street is skeptical.
But that very skepticism has created an opening.
BMY trades at roughly 9.5x forward earnings … about a 65% discount to Merck and a 35–40% discount to AbbVie and JNJ. That's a severe discount for a company that isn't standing still.
Because underneath the noise, the business is actually shifting. BMY's Growth Portfolio accounted for roughly 55% of total revenue in 2025, up from about 47% the prior year. The newer drugs (Camzyos, Cobenfy, Breyanzi) are gaining traction. The FDA recently granted priority review to iberdomide in multiple myeloma, adding another near-term catalyst.
The Growth Portfolio drove 16% year-over-year net sales growth, and the company is guiding for $46–$47.5 billion in 2026 revenue.
And while you wait for the turnaround to play out, BMY pays you a 4%+ dividend yield with 17 consecutive years of increases.
Deep discount. Growing pipeline. Income while you wait. That's the BMY bull case.
The stock is scoring an A in Value and in Safety. And if you haven’t heard … We love safe stocks.
Value Buy #2: Gilead Sciences (NASDAQ: GILD)
For years, Gilead carried the "value trap" label: HIV-dependent, oncology struggles, a pipeline that never seemed to deliver.
That story has changed.
Following a 2025 where shares surged over 40%, Gilead has transitioned from a legacy virology firm into a diversified business with high-growth engines in oncology and long-acting therapeutics.
The turning point was Yeztugo … the industry's first twice-yearly HIV prevention injection, launched in mid-2025. Analysts project peak sales of $4.5 billion for the drug alone. On the oncology side, Trodelvy recently received first-line approval in metastatic triple-negative breast cancer, with more pipeline readouts coming through 2026.
Management has pointed to Gilead's strongest portfolio and clinical pipeline in company history, with no major patent expiration expected before 2036.
And despite the run, the stock still trades at about 13x forward earnings with a 3%+ dividend yield on top.
The "value trap" label is gone. The discount hasn't fully closed. It’s scoring an A not just in Value, but also in its Financials Component Grade … one of our favorite indicators for strong returns.
The Bottom Line
BMY and GILD represent two different flavors of healthcare value. BMY is the deep-discount turnaround: cheap, overlooked, and starting to deliver. GILD is the re-rating story: a business that shed its old label and still hasn't been fully priced for what it's becoming.
JNJ is the name everyone trusts. Which is exactly why it's not offering much from here.
Our ratings reflect all of it. A for BMY and GILD. C for JNJ.
See all top-rated drug manufacturer stocks
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