Top healthcare stocks to watch: TD Cowen’s latest picks

Investing.com -- TD Cowen has identified its top picks in the Healthcare Facilities & Managed Care sector, with analysts expecting large payors to deliver positive third-quarter results while hospital fundamentals remain challenged. The firm highlighted three stocks as best positioned for upcoming earnings reports.

Analysts anticipate that major health insurance companies will broadly perform at or above consensus estimates, with several expected to raise full-year guidance. Recent investor meetings and performance tracking suggest select providers are positioned to outperform current market expectations in the second half of the year.

Elevance Health

TD Cowen’s top pick in the payor space is expected to beat third-quarter consensus and raise fiscal 2026 earnings guidance. Management has indicated that third-quarter 2026 earnings per share was tracking ahead of prior outlook. Analysts continue to believe full-year 2026 EPS will come in above the current "at least" $27.00 guidance. The firm expects Elevance to beat third-quarter consensus estimates and raise fiscal 2026 EPS guidance.

Encompass Health

Recent management meetings have increased TD Cowen’s confidence that second-half 2026 results will be in line to above consensus. Analysts see some room for upside on net revenue per discharge versus consensus expectations of positive 3.1 percent, along with continued expense management that should drive an EBITDA beat. The firm expects same-store discharge growth to accelerate in the second half of 2026. Encompass Health remains a top pick for TD Cowen.

DaVita

TD Cowen estimates third-quarter 2026 operating income of $540 million, compared to consensus of $542 million, with a positive 50 basis points improvement on normalized adjusted growth. Consistent health insurance exchange headwind commentary is expected to be a key focus during earnings calls. The stock rounds out the firm’s top three picks in the healthcare facilities and managed care sector.

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