This section contains press releases and other materials from third parties (including paid content). The Globe and Mail has not reviewed this content. Please see disclaimer.

3 Medical Stocks to Bet on Amid Market Optimism Following SpaceX IPO

Zacks Investment Research - Zacks Investment Research - Mon Jun 22, 10:42AM CDT

The stock markets are seeing a renewed interest from investors, especially retailers, following the debut of Space Exploration Technologies Corp.SPCX or SpaceX, which has been setting new records each day. The SpaceX IPO is the biggest ever IPO globally, raising an unprecedented $75 billion and beating the previous record of $29 billion set by Saudi oil firm Aramco in 2019.

The frenzy around this IPO led to a 4x oversubscription, attracting nearly $300 billion. SPCX secured a place among the world’s 10 largest companies on the day of its debut — a coveted position that most companies take decades to achieve.

The SpaceX IPO also made its owner, Elon Musk, the first and only trillionaire in the world. The second on the wealth list, Larry Page, co-founder of Google, a subsidiary of AlphabetGOOGL, trails him by nearly $900 billion.

The S&P 500 Index is up nearly 1.5% since SpaceX IPO and has gained 9.7% so far this year. The plethora of upcoming large IPOs could continue to attract funds, likely pushing the index higher in the second half of 2026.

Although funds are likely to flow primarily in the technology sector, a positive S&P 500 Index should help drive a broader rally across several sectors. The following three companies — CenteneCNC, DaVitaDVA and BrightSpring Health Services, Inc.BTSG — from the medical sector may benefit from a potential rally. Each of these companies currently sports a Zacks Rank #1 (Strong Buy) and has a VGM score of A or B, reflecting strong upside potential. You can see the complete list of today’s Zacks #1 Rank stocks here.

SpaceX & Upcoming IPOs

The SpaceX stock is already up 37% since its debut on June 11. Investors are dumping shares of other companies to become a part of this historic company. The strong optimism around the stock is unlikely to fizz out anytime soon.

Several indices, including NASDAQ 100, have fast-tracked the inclusion of SPCX into their constituent list. The company will be added to MSCI and Russell Indices by June-end, and will be included in the NASDAQ 100 on July 6. Apart from investor optimism, these inclusions are likely to drive additional investment into SPCX, as several passive funds that track these indices will begin adding the stock to their portfolios.

Following the SpaceX IPO, several other mega IPOs are slated to be launched in the second half of 2026, including AI giants — Anthropic and OpenAI. Alphabet is planning to raise approximately $80 billion through an equity sale soon. Alphabet plans to use the fund to support its AI-related capital expenditure.

Sound Prospect in Medical Sector

Apart from space exploration companies, a small section of medical companies is focusing on developing space medicine. Companies such as Eli Lilly, Merck, and Bristol Myers Squibb are conducting drug-development experiments on the International Space Station, while Vaxxinity is focused on developing vaccines and biologics.

However, these projects are unlikely to bring material impact to these companies anytime soon and should deliver results over the long term. Currently, the prospects of medical companies are being driven by the strong adoption of artificial intelligence and digital tools. The majority of large healthcare companies, as well as many smaller firms, are leveraging AI for drug development and integrating it into medical devices, thereby accelerating drug discovery and disease diagnosis.

The U.S. healthcare sector appears positioned for a stronger second half of 2026, supported by accelerating innovation cycles, favorable regulatory momentum, AI adoption, rising specialty drug demand, migration toward outpatient care, hospital capex recovery, and improving valuation attractiveness versus technology stocks. Per a Business Insider article, UBS and Franklin Templeton recently turned bullish on healthcare, citing structural demand growth, demographic tailwinds, and improving earnings visibility.

With a steady Fed rate, the accelerating capital spending by Hospitals is likely to continue in the second half of 2026, driving demand for robotic surgery, imaging, and advanced monitoring systems. Hospitals are also accelerating cloud migration and digital infrastructure modernization. The rising demand for cancer and rare-disease drugs is likely to drive Specialty pharmaceutical distribution. Moreover, growing home-healthcare demand is expanding direct-to-patient distribution opportunities.

The opening of the Strait of Hormuz following a peace deal between the United States and Iran is likely to bring energy prices down and clear the supply glut, benefiting all industries, including the medical sector.

The 5.8% decline so far this year in the Zacks Medical sector has led to attractive valuations. The sector has been trading at a discount to the S&P 500 Index since the beginning of 2025. The forward 12 month price-to-earnings (P/E F12M) ratio for the sector is 19.77X currently, below its five-year median of 20.45X.

P/E F12M Valuation: Medical sector vs S&P 500