Prescription for Beats: 3 Healthcare Stocks Set to Outperform in Q3

The healthcare sector is navigating a mixed Q3 earnings season, with overall sector earnings projected to decline 2.9% despite a 9.1% revenue increase, driven by stronger outpatient demand and premium rate hikes but tempered by escalating medical costs and operational expenses. Amidst these dynamics, Humana (HUM) is positioned for an earnings beat, fueled by premium growth and cost management, with a +4.29% Earnings ESP and projected 8.6% EPS growth. Cencora (COR) is also expected to outperform, benefiting from GLP-1 drug sales and acquisitions, holding a +0.31% ESP and 13.5% EPS growth forecast. Similarly, Globus Medical (GMED) shows potential for strong results, driven by robust sales and strategic acquisitions, with a +1.69% ESP and 17.2% revenue growth anticipated.

Analysis

The healthcare sector is navigating a nuanced Q3 2025 earnings season, with overall sector earnings projected to decline 2.9% despite a 9.1% revenue increase. This divergence is driven by robust outpatient demand, higher patient volumes, and premium rate increases, which are significantly offset by escalating medical costs due to greater utilization and facility occupancy. Heavy investments in technology and rising wages are also contributing to cost burdens, alongside persistent regulatory scrutiny.

Despite these pressures, growth in higher-margin commercial memberships and technological innovation, particularly AI and automation, are providing some tailwinds. These advancements are streamlining operations and improving diagnostic accuracy, potentially mitigating some cost challenges. Health insurers are also leveraging new product launches and digital capabilities to support growth.

Three companies, Humana (HUM), Cencora (COR), and Globus Medical (GMED), are identified as potential outperformers this quarter. Humana is poised for strong premium growth and cost management, with a +4.29% Earnings ESP and an 8.6% EPS increase forecast. Cencora is expected to benefit from increased GLP-1 drug sales and the RCA acquisition, showing a +0.31% ESP and 13.5% EPS growth.

Globus Medical anticipates robust sales in domestic and international markets, bolstered by the Nevro acquisition, projecting 17.2% year-over-year revenue growth and a +1.69% ESP. These selections are based on a proprietary methodology combining positive Earnings ESP and a strong Zacks Rank, indicating a high probability (up to 70%) of beating earnings estimates.

Key Decisions for Investors

• Investors should carefully evaluate the mixed signals in the healthcare sector, focusing on companies demonstrating effective cost management and leveraging technological innovation.
• Consider initiating or increasing positions in Humana (HUM), Cencora (COR), and Globus Medical (GMED) given their strong Earnings ESP and Zacks Ranks, which suggest a high probability of beating earnings estimates.
• Monitor ongoing medical cost trends, particularly utilization rates and facility occupancy, and the impact of regulatory changes on profit margins, as these remain key sector headwinds.