RBC Capital has raised its rating on the Healthcare sector from Market Weight to Overweight, identifying 11 high-conviction investment ideas. The firm cited improving capital flows, positive earnings and sales revision profiles, and attractive valuations as the basis for the upgrade. Lori Calvasina, Head of Equity Strategy at RBC, noted that Healthcare often moves inversely to the Technology sector's relative performance against the S&P 500, making it a natural alternative for investors reducing tech exposure. The sector also performed well in risk factor assessments, including scenarios involving rising 10-year yields and a weakening artificial intelligence theme.
Eli Lilly (LLY) is RBC's preferred pharmaceutical name, with the firm assigning an Outperform rating and a $1,500 price target that implies approximately 30% upside. RBC expects Eli Lilly to beat and raise its third-quarter results, viewing a December 7 pipeline event as a key catalyst for Phase 2 and 3 readouts scheduled for next year. At 24 times one-year forward price-to-earnings, RBC believes the market is underpricing the company's projected leading sales growth of 15% and earnings per share growth of 21% through 2030. Eli Lilly is also an RBC Global Top 30 high conviction idea.
argenx (ARGX) received an Outperform rating with a $1,100 price target. Despite recent setbacks from October readouts, RBC views the subsequent sell-off as overdone and identifies a buying opportunity. The firm highlights that few biotech companies generate approximately $6 billion in top-line revenue that is likely to grow to $10 billion before the end of the decade, while argenx maintains 20 ongoing Phase II and III trials.
Revolution Medicines (RVMD) was given an Outperform rating with a $260 price target. The company is positioned strongly on physician enthusiasm for the Rasonque launch. With shares trading approximately 15% off their highs, RBC remains confident in the high-quality launch and pipeline story, noting more value to be unlocked.
Biogen (BIIB) is a top pick entering a catalyst-rich period in high-value immunology indications. RBC sees near-term Phase III data for litifilimab in SLE in fourth-quarter 2026 as a re-rating opportunity. Biogen holds an Outperform rating with a $256 price target and is an RBC Global Top 30 high conviction idea.
Ascendis (ASND) received an Outperform rating with a $290 price target. Extensive checks suggest Yorvipath could become a €3 billion-plus drug. The company is now profitable and is launching a drug for a sizable indication with little competition.