The broad healthcare sector accounts for roughly one-fifth of the U.S. economy and continues to expand. While most attention tends to go to the direct-care segment, the life-sciences industry is an equally critical pillar of the system. It spans everything from laboratory services to drug discovery, and its research and development efforts are major drivers of progress in patient care.
TipRanks Cyber Monday Sale
- Claim 60% off TipRanks Premium for data-backed insights and research tools you need to invest with confidence.
- Subscribe to TipRanks' Smart Investor Picks and see our data in action through our high-performing model portfolio - now also 60% off
Grand View Research estimated the life sciences market at $167.82 billion worldwide in 2004, and expects it to reach just over $401 billion by 2033 – indicating a 10.2% CAGR over the 10-year period. An ever-increasing demand for new research instruments along with growing investments in biotech and pharmacological research are among the biggest drivers of the life sciences industry.
Morgan Stanley analyst Kallum Titchmarsh shares that constructive view and is particularly bullish on core tools – the essential lab technologies that underpin nearly all life-science workflows. These include instruments and systems used for sample preparation, gene sequencing, cell analysis, imaging, and other foundational research tasks.
“With end market bright spots beginning to emerge and plenty of catalysts sitting in the pipeline across our coverage, we think there’s lots to like in the space entering 2026… For core tools, we think there are a number of bright spots heading into the coming year. Firstly, we expect pharma R&D budgets to remain robust, supported in part by recent developments around MFN (Most Favored Nation). Our CRO survey also suggests healthy R&D budget increases across various customer groups, providing more opportunities to add/replace equipment where needed longer-term,” Titchmarsh opined.
The Morgan Stanley analyst goes on to up the ante on two top names in the life-science tools space, with a particular focus on core tool providers. We’ve used the TipRanks database to dig into his picks and explore why these plays look so compelling today.
Danaher (DHR)
Danaher, the first life sciences stock we’ll look at, is a large-cap leader in the field. This $160 billion company provides a wide range of science and technology services in the fields of biotech and diagnostics in the overall medical and life sciences research sectors. The firm traces its roots back to 1969 and keeps its headquarters in Washington DC, a location that allows management to keep its finger on the pulse of science and biotech policymaking.
The company operates through three clear business divisions. The Life Sciences segment focuses on developing new innovations in medicine, including disease treatments, new therapies and vaccines, and improving food and water testing, but also includes such other important health matters as improving fluid filtration on commercial airplanes. The overall thrust of Danaher’s life sciences business is to provide customers with the tech and the tools to improve their work and their outcomes.
Next on the list is Danaher’s Diagnostics business, which is focused on developing the hardware and software tools required by today’s advanced medical labs. These are the necessary foundations that medical investigators use to improve their diagnostic work, leading to faster and more accurate test results and a better understanding of patients’ needs. Danaher is working to improve confidence in the diagnostic field, always a matter of urgent importance for healthcare providers.
The company’s fastest-growing division is Biotechnology. Under this rubric, Danaher provides tech, services, and expertise to its clientele: workers and providers in the healthcare field who are developing new medications, treatments, and procedures. Danaher supports critical research in emerging biotech as well as large-scale biopharmaceutical manufacturing.
On the financial side, Danaher reported better-than-expected results in its last quarterly release, which covered 3Q25. In the quarter, the company had a top line of $6.1 billion, up more than 4% year-over-year and $55 million above the forecast. At the bottom line, Danaher’s non-GAAP EPS figure of $1.89 was 17 cents per share better than the estimates. In addition, Danaher realized free cash flow of $1.4 billion in the third quarter.
DHR is a top pick in the life science field for analyst Titchmarsh. In his write-up of the stock for Morgan Stanley, he says: “We believe DHR has positioned its portfolio to attractive end markets, which despite experiencing notable volatility in recent years, should enable durable long-term growth. Following Q3 results, we now believe Street numbers look sensible for 2026 and to us, this is the cleanest setup entering a new year for some time… We view DHR as a best-in-class innovator and management’s track record on asset integration likely bodes well for a more favourable deal environment. Valuation on the whole screens attractive relative to peers and history, leaving us bullish on the name.”
To this end, Titchmarsh assigns DHR an Overweight (i.e., Buy) rating, and a $270 price target that suggests a one-year gain of 18%. (To watch Titchmarsh’s track record, click here)
The 14 recent ratings on DHR shares split 11 to 3 in favor of Buys over Holds, for a Strong Buy consensus rating. The shares are trading for $228.46, and their $246.09 average target price implies an upside of ~8 % on the one-year horizon. (See DHR stock forecast)
Agilent Technologies (A)
The next stock is another major player in the life-science tools sector. Agilent is a global provider of analytical instruments, diagnostics, and laboratory solutions, serving researchers and clinicians across a wide range of fields. Headquartered in California’s Bay Area, a core hub for scientific innovation, the company carries a market cap of $42 billion and reported more than $6.5 billion in revenue for fiscal year 2024.
Agilent operates in six key areas of the field. In its Food segment, the company develops technologies to keep chemical, viral, bacterial, and other microbial contaminants out of the global food supply. Agilent serves both private and public sector clients in this field, and counts government regulatory agencies among its important customers.
The company also works in the fields of Environment and Forensics, where it provides accurate, rapid testing methods for monitoring environmental quality. Also included here are technologies to ensure fair play in sports as well as fair and verified evidence in courtroom trials.
Agilent’s work in the related fields of Pharmaceuticals and Diagnostics provides direct support for medical professionals. Agilent’s pharmacological solutions have found wide use in drug research and development, as well as in manufacturing and quality control. In the diagnostic field, the company’s technology is designed to give doctors and other providers a ‘head start’ in combating disease.
Under its Chemicals and Advanced Materials segment, Agilent’s work spans a wide range of activities. The company’s products have found applications ranging from ensuring quality control and regulatory compliance to general safety testing in the chemical and energy industries. Agilent also produces specialty chemicals for use in the food and pharmacology businesses, and its advanced materials are used in electronics, biomedicine, semiconductor manufacturing, and batteries. The company even has its hands in the production of petroleum products for fuels and feedstocks.
Agilent’s sixth division is its Research segment, which works with top-tier universities and their research laboratories. The company provides tools and lab solutions that have taken important roles in supporting cancer, diabetes, Alzheimer’s, Parkinson’s, and cardiovascular disease research programs. The company’s lab tools include everything from instruments to sample prep solutions to software systems, all aimed at making research faster and more accurate.
In its report for fiscal period 4Q25, which ended this past October 31, Agilent reported a top line of $1.86 billion. This was up more than 9% year-over-year and beat the forecast by $28.5 million. At the bottom line, the company’s $1.59 non-GAAP EPS figure represented a year-over-year increase of 9% and was a penny better than had been expected.
Morgan Stanley’s Titchmarsh sees plenty of reasons why the company should see growth going forward. Laying out the case, he writes, “Agilent’s recently initiated transformation and Ignite programs expected to reaccelerate growth / drive margin expansion. Despite a lower end-market growth profile, leadership in the Applied markets positions Agilent well to capture emerging growth drivers in PFAS, battery development, and semiconductor analysis. End-to-end biopharma offerings plus a comprehensive suite of pathology solutions further enables a strong exposure to faster growing biopharma/diagnostic segments. ACG should also see robust demand as analytical labs prioritize productivity and efficiency. Collectively, we view Agilent as well-positioned to weather macro challenges while capturing near-term growth opportunities.”
The Morgan Stanley sector expert gives A shares an Overweight (i.e., Buy) rating, and he complements that with a $180 price target that points toward a 12-month upside potential of 20.5%.
All in all, Agilent has earned a Moderate Buy rating from the analyst consensus, based on 12 recent reviews that include 8 Buys and 4 Holds. The stock is priced at $149.26, and its $167.92 average price target suggests a 12.5% upside for the coming year. (See A stock forecast)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.