2 Healthcare Stocks Poised for a Comeback in 2026

Zoetis (NYSE: ZTS) and Regeneron Pharmaceuticals (NASDAQ: REGN) are two healthcare leaders that have lagged broader equities over the past 12 months, as both encountered headwinds that led to worse-than-expected financial results. However, following recent developments, Zoetis and Regeneron look much better than they did six months ago, and both could bounce back this year. Let's find out why.

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1. Zoetis

Zoetis is a leading animal health company with a vast portfolio of products across several categories, including fish, poultry, and livestock. Still, everyone knows that the company's most important business segment is companion animals. Last year, two of Zoetis' key growth drivers, Librela and Solensia, encountered challenges. Librela treats osteoarthritis (OA) pain in dogs, and Solensia targets OA pain in cats.

There has been significant scrutiny of these products due to safety concerns, with some pets experiencing severe adverse events after taking them.

This has impacted Zoetis' revenue, but the company has a solution. Last year, it earned approval for Lenivia and Portela, its next-gen OA pain treatments for dogs and cats, in several countries. These should help Zoetis retain a strong market share in this space, as veterinarians concerned about the side effects of Librela and Solensia will opt for Lenivia and Portela instead.

Further, the latter duo has another advantage: They are both long-acting medicines that can be administered less frequently. These newer approvals will help improve Zoetis' financial results this year. The company can, of course, still count on well-established growth drivers, including Apoquel, which treats allergic itch in dogs. Apoquel has continued to perform pretty well despite increased competition, and it still has a large addressable market. That's another key reason Zoetis could make a comeback in 2026.

2. Regeneron

Regeneron had been facing stiff competition for one of its best-selling medicines, Eylea, which treats several eye diseases, including wet age-related macular degeneration. However, it has made significant progress in addressing these challenges. The company received approval for a higher-dose (HD) version of the medicine. And last year, it earned important label expansions for HD Eylea.

Thanks to these developments, the company will be able to offer it to a larger pool of patients with a more convenient dosing schedule (fewer injections over the treatment course), a significant selling point. That's why Regeneron's shares have started to move in the right direction over the past six months or so. Meanwhile, the company can still count on its top growth driver, Dupixent, which treats eczema, COPD, and other conditions.

And the biotech company has several exciting pipeline candidates, including in weight management. Regeneron could maintain strong momentum this year and deliver market-beating returns.

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Regeneron Pharmaceuticals and Zoetis. The Motley Fool has a disclosure policy.