No one knows for sure what the new year will hold for investors. However, some stocks' chances for success look good.
We asked three Motley Fool contributors to pick healthcare stocks they think could be big winners in 2025. Here's why they chose Amgen (AMGN 0.75%), Eli Lilly (LLY 0.50%), and Summit Therapeutics (SMMT -0.60%).
Amgen is a mispriced stock with a ton of upside
David Jagielski (Amgen): Shares of Amgen started crashing in late November following the release of data from a phase 2 clinical trial for its weight loss candidate, MariTide. I think that plunge set the stock up for some serious gains in 2025.
When I read that the stock price was falling because its monthly injection only helped people lose an average of 20% of their body weight after 52 weeks -- as opposed to the 25% that analysts were expecting -- I thought it was truly indicative of how speculative the markets have become. Seemingly everything has been reduced to whether something beats expectations, whether it's an earnings result or data from a clinical trial. Forget the fact that the data didn't indicate that participants' weight loss had plateaued (suggesting further weight loss could be attainable over longer periods of use), or that some patients took MariTide even less frequently than once a month. No, it all gets reduced down to whether the treatment candidate met expectations. It didn't, so let the selling begin.
But for those who want to buy the stock, and who see the results for what they are -- a clear indication that MariTide is a promising treatment that could be a more attractive alternative to weekly injections from Eli Lilly and Novo Nordisk (NVO 0.15%) -- the sell-off is great news.
When the markets overreact like this, it creates a chance for investors to jump in and get a stock at a discount. Such opportunities may not last for long. I think that as cooler heads prevail and investors realize the study's results really weren't that bad at all, Amgen's stock will more than recoup the losses it has incurred in recent weeks.
This top healthcare company trades at 13 times forward earnings It has a diverse portfolio of products, yields 3.6% at the current share price, and has a GLP-1/GIPR combination treatment in the works that could offer serious competition to Eli Lilly and Novo Nordisk. I think Amgen is hands down one of the best healthcare stocks to buy right now.
Multiple catalysts on the horizon
Prosper Junior Bakiny (Eli Lilly): Despite a recent pullback, Eli Lilly's shares are up by 32% over the past year. And in 2025, the company could turn in yet another excellent performance, as it generally has over the past decade. Several catalysts could jolt the drugmaker's stock price this year.
First, tirzepatide, which it markets as Zepbound and Mounjaro, could earn label expansions, including for reducing the risk of developing type 2 diabetes.
There will also be clinical readouts for the medicine as it is being tested for other conditions such as metabolic dysfunction-associated steatohepatitis, an area with a high unmet need. Positive results could help Eli Lilly's shares move in the right direction.
Second, the company has other exciting pipeline programs, some of which will make progress next year. Eli Lilly's work in the weight loss area looks particularly exciting. Its late-stage pipeline features retatrutide and orforglipron, two potential weight loss treatments, and it has many others in the early stages of development. Good news on the R&D front could be a major catalyst for Eli Lilly's share price.
Lastly, the pharmaceutical giant's financial results should remain strong. Besides the fact that Zepbound and Mounjaro will continue to grow their sales rapidly, and that its other established medicines are still performing well, newer products could start making an impact. That's especially the case for Kisunla, a therapy for Alzheimer's that earned regulatory approval in July. With all that going Eli Lilly's way, the stock could once again deliver market-beating returns in 2025.
However, regardless of what happens in the next 12 months, Eli Lilly is an excellent stock to buy and hold for the long term.
Poised for another explosive year
Keith Speights (Summit Therapeutics): Shares of Summit Therapeutics skyrocketed by 583% in 2024. The main catalyst behind this staggering gain was great news from a phase 3 study of ivonescimab in treating non-small cell lung cancer (NSCLC). However, that clinical trial was conducted by Summit's partner, Chinese drugmaker Akeso.
I think Summit Therapeutics is poised for another explosive year, and there's one simple reason behind my optimism: It should report results from its own late-stage study near mid-year. Granted, this trial is evaluating ivonescimab in combination with chemotherapy as a second-line treatment for NSCLC instead of as a first-line treatment, which was the case in the Akeso study. But if the results look good, it could set the stage for Summit to advance toward the regulatory approval of its first product.
While Akeso's study didn't directly benefit Summit, investors understood its significance for the Florida-based drugmaker. Ivonescimab beat Merck's blockbuster cancer immunotherapy Keytruda in a head-to-head study -- something that had never happened before. The stellar results from Akeso's late-stage study bode well for Summit's study.
Summit isn't staking all of its fortunes on ivonescimab in the second-line setting for NSCLC, either. The company has a phase 3 study underway of the drug in combination with chemotherapy as a first-line treatment for NSCLC. It also plans to initiate another late-stage study early this year of ivonescimab as a monotherapy in the first-line setting.
Even without a product on the market yet, Summit's market cap stands at around $13.5 billion. If the candidate's late-stage results are positive (and I think they will be), this up-and-coming drugmaker could quickly grow much larger.
