Time to Buy Eli Lilly and Other Undervalued Healthcare Stocks?

Healthcare has been one of the toughest sectors for investors over the past year. In fact, over the last 12 months, it has been the worst performing sector in the entire market. Many of the industry’s former high-flyers, like Eli Lilly (LLY), whose GLP-1 drugs have been hailed as breakthrough treatments for diabetes and obesity, have faced steep corrections.But with sentiment now near rock-bottom and valuations reset, the sector may be offering a rare entry point. I see a particularly compelling setup for three names: Eli Lilly, which still offers the strongest exposure to the long-term GLP-1 growth story; CorMedix (CRMD), a small-cap healthcare company with significant upside potential and a top Zacks Rank; and Johnson & Johnson (JNJ), a blue-chip healthcare giant showing fresh momentum. Together, these stocks provide a diversified mix of innovation, stability, and growth in a sector that’s been left for dead, but might be on the verge of a rebound.Image Source: Zacks Investment ResearchEli Lilly: Shares are Beaten Down, But Poised to ReboundAfter a punishing 35% slide from its record highs, Eli Lilly now looks like a compelling opportunity for long-term investors. The recent wave of selling peaked last week following the company’s quarterly earnings release. While Eli Lilly easily topped Wall Street’s earnings and revenue expectations, a new version of its weight-loss drug delivered clinical trial results that came in below lofty market forecasts, triggering a sharp, sentiment-driven selloff.Yet the broader story hasn’t changed. Lilly remains the clear leader in the booming GLP-1 space, one of the most exciting and fast-growing segments in healthcare. The market potential for weight loss drugs is massive, and Eli Lilly’s pipeline and brand strength leave it well positioned to capture a large share of that growth. Importantly, the selling pressure appears to have subsided, with recent price action showing signs of buyers stepping back in and the stock beginning to curl higher from its lows.Analysts project Eli Lilly’s earnings will grow at an impressive 30.8% annually over the next three to five years. Despite that growth outlook, the stock now trades at just 28.3x forward earnings, well below its 10-year median of 38.2x and also beneath the richer multiples it commanded during peak GLP-1 enthusiasm. This reset has brought the PEG ratio under 1, signaling that shares are undervalued relative to their long-term growth potential.With its leadership in a high demand category, robust growth forecasts, and a valuation that’s far more reasonable than in recent years, Eli Lilly looks primed for a rebound as sentiment normalizes and investors refocus on the company’s long-term earnings power.Image Source: Zacks Investment ResearchCorMedix: Stock Gets UpgradedCorMedix is a stock that really stands out to me, supported by a combination of strong fundamentals, accelerating sales growth, and rising analyst expectations. The company develops and commercializes therapeutic products for the prevention and treatment of infectious and inflammatory diseases, with a key focus on Neutrolin, an FDA approved catheter lock solution aimed at reducing costly and dangerous bloodstream infections in patients undergoing dialysis or other intensive therapies.From a valuation perspective, CorMedix looks very attractive. Shares currently trade at just 9.5x forward earnings, a compelling entry point given the company’s growth trajectory. Revenue is projected to surge an p 337% in 2025, followed by an additional 62% increase in 2026.The bullish case is further supported by a Zacks Rank #1 (Strong Buy), reflecting substantial positive revisions to earnings forecasts. Over the past month, analyst estimates have climbed roughly 30% across the board, with some projections raised by as much as 46%. These upward revisions not only validate the growth outlook but also help keep the valuation reasonable, even after factoring in the stock’s recent momentum.With explosive revenue growth ahead, a leadership position in a specialized healthcare niche, and strong upward estimate revisions, CorMedix is emerging as a small-cap healthcare play with outsized potential for investors seeking both growth and value.Image Source: Zacks Investment ResearchJohnson & Johnson: Stock Breaking out From Multi-Year BaseJohnson & Johnson is one of the most established and diversified companies in the US healthcare industry, with a core business spanning pharmaceuticals, medical devices, and consumer health products. Its size, breadth, and brand recognition give it a uniquely defensive profile, allowing it to generate steady earnings and cash flow even during periods of economic uncertainty.For nearly four years, JNJ’s stock had been consolidating within a broad trading range, with buyers and sellers locked in a stalemate since early 2021. That consolidation phase ended just last week, when shares broke out above the upper end of this epic base, a technical signal that may precede a major bull run.While Johnson & Johnson isn’t a high growth name, it offers investors defensive characteristics and a resilient business model. The company’s earnings outlook has also been improving, with recent upward revisions earning it a Zacks Rank #2 (Buy). This positive momentum, combined with the long-awaited technical breakout, suggests that JNJ could be entering a new phase of steady price appreciation.For investors seeking stability, reliable dividends, and a technical setup pointing toward renewed upside, Johnson & Johnson is worth a close look.Image Source: TradingViewShould Investors Buy Shares in LLY, CRMD and JNJ?After a brutal stretch for healthcare stocks, the sector is showing signs of life. Eli Lilly offers unmatched leadership in the GLP-1 market with a valuation reset that makes growth more attractive. CorMedix combines explosive revenue potential with strong upward estimate revisions. Johnson & Johnson adds stability and a fresh technical breakout to the mix. Together, they represent a balanced basket of innovation, value, and defensive strength, positioning investors to benefit if healthcare’s long-awaited rebound is finally underway.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in the coming year. While not all picks can be winners, previous recommendations have soared +112%, +171%, +209% and +232%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Johnson & Johnson (JNJ): Free Stock Analysis Report Eli Lilly and Company (LLY): Free Stock Analysis Report CorMedix Inc (CRMD): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks