The Often-Missed Corner of Healthcare That Wall Street Is Loving

Key Points

• Numerous lab equipment stocks are down in the high-teens so far this year, but seemingly modest sales growth may hide fundamental strengths.
• These companies can present a more secure approach to the healthcare industry than some higher-risk alternatives.
• Still, headwinds including tariff impacts and inflation remain a concern.

The healthcare industry is notoriously volatile—company fortunes can be made or broken on the success of a single product or the results of a clinical trial, and it's not uncommon for stocks in this sector to see some of the wildest spikes (and drops) across the market. Investors keen to access the healthcare space but concerned about this turbulence might instead adopt a "picks and shovels" approach that focuses on companies providing essential equipment and services to the industry, rather than on higher-risk names in the pharmaceuticals space, for example.

Lab equipment stocks are often overlooked by investors considering healthcare, despite the fact that some of the companies in this subindustry are among the largest in the space. Given the host of external factors that could impact healthcare companies in 2026—shifting subsidies, an aging population with greater needs, inflation, the growing role of AI, and more—core lab equipment names may be even more appealing than usual. The companies below are some of the major players worth a closer look by any investor considering this industry.

A Recent Dip Masks Thermo Fisher's Long-Term Strengths

$182-billion life sciences solutions, diagnostics, and analytical instruments company Thermo Fisher Scientific NYSE: TMO has had a difficult start to 2026, with shares falling over 15% year-to-date (YTD) as the company has recently dipped into TradeSmith's red zone for financial health. A good portion of that recent sluggishness may be due to tariffs and FX volatility, which combined to negatively impact margins by more than 100 basis points in 2025.

Otherwise, there are a number of bright spots for investors to look for in Thermo Fisher's recent performance.

In Q4 2025, revenue of $12.2 billion increased by 7% year-over-year (YOY), beating analyst predictions by a quarter of a billion dollars. Adjusted earnings per share (EPS) also topped predictions at $6.57.

This momentum may be due to several prominent product launches in recent months, including the Orbitrap Astral Zoom mass spectrometer and new bioreactor products.

Ultimately, Thermo Fisher's comprehensive business model and offerings could provide it more than enough cushion in the face of external pressures. Even if guidance for 2026 is tepid, with revenue expected to climb by 4% to 6% for the year, improvements to EBITDA margin are a welcome tailwind, and the company's fundamental customer demand should remain strong. This may be why, despite the recent selloff, analysts still strongly favor TMO shares. 17 out of 19 call the company a Buy or equivalent, and consensus estimates suggest more than 29% in upside potential.

Danaher's Business May Be Improving, Even as Guidance Remains Modest

Danaher Corp. NYSE: DHR shares are down almost 20% YTD, as the instruments, consumables, and reagents firm finds itself in a similar position to Thermo Fisher above. Though 2026 guidance suggests modest core revenue growth of 3% to 6% YOY, this may mask decent results from the latest quarter, including a top- and bottom-line beat in Q4 and $5.3 billion in free cash flow for 2025.

Two bright spots for 2026 include Danaher's bioprocessing business, which is expected to deliver high-single-digit revenue growth over the year, thanks to strong monoclonal antibody demand, and diagnostics.

The latter of these is likely to benefit from FDA clearances. Further driving potential sales growth is a trend that has seen equipment orders begin to improve after a prolonged difficult period.

Analysts are fairly optimistic about DHR, predicting that the company will see 12.3% in earnings growth in the year to come, as well as about 35% in share price improvement.

This may be why 19 out of 22 ratings for DHR shares are Buys.

Agilent's Biocare Purchase Could Be a Catalyst

Agilent Technologies NYSE: A appears to be a bit behind the companies above based on its latest earnings, which show not only tepid 4.4% YOY revenue growth but also marginal misses on both earnings and revenue relative to analyst expectations.

However, the company may have a hidden growth engine thanks to its recent acquisition of Biocare Medical, which should give it a crucial advantage in cancer diagnostics.

Though the Biocare price tag was lofty at nearly $1 billion, it should provide Agilent with a new source of recurring revenue, and in an area that is seeing rising demand.

Cancer diagnostics may also be a higher-margin business line than some of Agilent's preexisting operations, which may help to improve its operating margin (which stood at 24.6% in the last quarter).

Despite a decline of about 17% YTD, Agilent shares could see 42% in possible upside, according to analysts. Wall Street calls the stock a Moderate Buy overall, with 13 out of 16 ratings of Buy or similar.