5 Healthcare Names to Watch as Sector Rotation Is in Full Swing

• StockStory Top Pick LLY -1.11% NVDA +0.86%
• IBB -0.52% REGN -1.08% AMGN +0.26%

Key Points

• The healthcare sector is outperforming the broader market and tech sector in Q4, confirming a substantial capital shift into the defensive industry.

• Strong Q3 earnings from sector heavyweights, including Eli Lilly’s explosive GLP-1 growth and JNJ’s renewed momentum, have reinforced confidence in the sector’s next leg higher.

• From defensive giants to high-beta biotech, multiple healthcare names and ETFs are breaking multi-year ranges and showing powerful momentum into year-end.

• Interested in Eli Lilly and Company? Here are five stocks we like better.

While several retail favorites and high-growth technology stocks are struggling to find holiday cheer this year, the story in the healthcare sector couldn't be more different. Amid fears surrounding mega-cap technology stocks like NVIDIA (NASDAQ: NVDA) and uncertainty in AI capital expenditures, investor capital has been flowing into the defensive yet growth-oriented healthcare space.

Year-to-date (YTD), the Health Care Select Sector SPDR Fund (NYSEARCA: XLV) has broken out of its slumber, posting a solid 14.5% gain. With interest rates stabilizing and a rate cut potentially coming in December, strong Q3 earnings across the sector suggest that the healthcare growth cycle is still intact.

→ Intel’s Black Friday Breakout: Apple Rumors Fuel a Holiday Rally

As we head into year-end, here are five healthcare names, ranging from stability plays to high-beta biotech, that are worth watching closely.

The Sector Benchmark: Health Care Select Sector SPDR Fund

For investors seeking broad exposure without single-stock risk, the Health Care Select Sector SPDR Fund remains a premier option. The $41 billion fund has steadily gained ground this year, up over 14% YTD and trading near its 52-week high of $158.

→ NVIDIA’s 13F Reveals 2 Q3 Winners—And 1 Painful Miss

While it hasn't delivered the multi-year explosive growth of the tech sector, its stability in Q3 and Q4 has been notable.

In Q3, the XLV outperformed not only the benchmark S&P 500 but also the high-flying tech sector, a signal that could indicate a significant sector rotation.

→ NuScale's Shocking Q3 Was a Bullish Signal in Disguise

Offering a 1.55% dividend yield and exposure to leading companies like Johnson & Johnson, UnitedHealth Group (NYSE: UNH), and Amgen (NASDAQ: AMGN), the XLV captures a broad swath of the healthcare industry.

From a technical perspective, the healthcare ETF could be on the verge of an impressive breakout.

With its recent outperformance, the ETF is now poised to retest its key resistance level near $160. Investors will want to watch XLV closely, as a surge past $160 could signal a new era of momentum and outperformance for the sector.

Eli Lilly: The Trillion Dollar Weight-Loss King

Eli Lilly (NYSE: LLY) needs little to no introduction, having cemented itself as the undisputed king of the weight-loss revolution. It stands out in the sector as one of the top-performing S&P 500 healthcare stocks of the year, thanks to a string of earnings beats and a major technical breakout above $850.

The stock has been a juggernaut and outright leader in the sector, driven by the insatiable demand for its drugs Mounjaro and Zepbound.

In its latest earnings report on Oct. 30, the company shattered expectations, reporting a massive 53.9% year-over-year (YOY) revenue surge to $17.60 billion, crushing analyst estimates.

The bottom line was equally impressive, as Lilly reported earnings per share (EPS) of $7.02, beating estimates by 60 cents.

The company also raised its full-year 2025 revenue guidance to $63 billion to $63.5 billion, signaling that supply constraints are easing and demand shows no signs of slowing.

With the stock having recently crossed the historic $1 trillion market cap milestone, the question isn’t about viability but valuation. Its price-to-earnings ratio (P/E) of 53 and forward P/E of 33, coupled with a relative strength index (RSI) of 73.5, paint a rich picture.

Investors looking to gain exposure to the stock might be better off waiting for a measured pullback toward prior support near $1,000. With international expansion of its GLP-1 portfolio ramping up in 2026, this momentum play remains a favorite for growth-focused investors.

Johnson & Johnson: The Dividend King Reclaims Its Crown

After a quiet 2024, Johnson & Johnson (NYSE: JNJ) has roared back to life in the second half of 2025. The narrative has shifted from litigation fears and headwinds to strong operational execution, specifically in its high-margin MedTech and Oncology divisions.

JNJ posted a standout Q3 on Oct. 14, reporting adjusted EPS of $2.80, which topped the consensus estimate of $2.76.

Quarterly revenue climbed 6.8% YOY to $24.0 billion, driven by a nearly 20% surge in oncology sales.

CEO Joaquin Duato noted that the company is entering a "new era of accelerated growth," and the market seems to agree.

The stock has seen a substantial recovery, breaking back above critical resistance levels.

For many years, the stock traded in a sideways channel.

But that changed in August, when the stock roared above resistance and never looked back. YTD, it's now an outright leader in the sector and the S&P 500, with shares up a whopping 43%.

Perhaps most attractive is its defensive nature as a Dividend King. JNJ offers a degree of reliability with its 2.5% dividend yield and a 64-year track record of dividend increases. Analysts share a bullish market sentiment, with a consensus Moderate Buy rating based on 26 analyst ratings.

Gilead Sciences: The Value & Yield Play

Gilead Sciences (NASDAQ: GILD) has quietly become one of the most interesting turnaround plays in the sector. Known for its HIV dominance, the company has successfully diversified into oncology, and investors are finally being rewarded.

In its Q3 report on Oct. 30, Gilead delivered an impressive earnings beat. The company reported EPS of $2.43, which easily beat the consensus estimates of $2.16 by 31 cents. Revenue grew 3% YOY to $7.8 billion.

The company raised its 2025 sales forecast to $28.3 billion to $28.7 billion, highlighting continued strength in HIV. From a valuation and technical perspective, the setup remains attractive.

Not only does the healthcare giant offer a 2.5% yield, but it also has a relatively cheap P/E of 19.4 and a forward P/E of 14.44.

While the stock is already up 39% YTD, the technical formation appears bullish and far from overbought. After breaking out of its lengthy consolidation, the stock is trading above prior significant resistance near $120. If GILD can hold above its previous all-time high and its resistance near $120, it could become a standout name in the sector.

iShares Biotechnology ETF: The Risk-On Rotation

The iShares Biotechnology ETF (NASDAQ: IBB) provides investors with beta-rich exposure to the rebounding biotech space.

After years of underperformance, the sector is seeing renewed interest as rates stabilize.

Up 31% YTD and 43% over the last six months, the IBB ETF is benefiting from fresh capital inflows.

Providing well-rounded exposure to industry giants such as Regeneron (NASDAQ: REGN), Gilead Sciences, and Amgen, the ETF is now just off its multi-year breakout level near $180. If it hurdles that resistance, this biotech sector ETF may be poised for a sustained rally.

The article "5 Healthcare Names to Watch as Sector Rotation Is in Full Swing" was originally published by MarketBeat.