Industry Overview - The Zacks Medical – Biomedical and Genetics industry group ranks in the top 26% out of over 250 industries, indicating strong performance and potential for continued outperformance over the next 3 to 6 months [7] - The industry group has favorable metrics, with a PEG ratio of 1.57 and projected EPS growth of 13.18%, compared to the iShares S&P 500's PEG ratio of 2.12 and projected EPS growth of 6.87% [9] Company Highlights - Gilead Sciences (GILD) is a leading stock in the biomedical sector, known for its innovative medicines for life-threatening illnesses. It has a Zacks Rank of 2 (Buy) and has a trailing four-quarter average earnings surprise of 19.5% [11][12] - GILD reported fourth-quarter earnings of $1.90 per share, exceeding consensus estimates by 13.8%. The stock is trading at 14.5 times forward earnings and has increased over 23% in 2025, reaching a 52-week high [12][13] - Jazz Pharmaceuticals (JAZZ) is another strong performer in the same industry, holding a Zacks Rank of 1 (Strong Buy). The company focuses on neuroscience and oncology and has surpassed earnings estimates in three of the past four quarters [15][16] - JAZZ reported fourth-quarter earnings of $6.60 per share, a 14% surprise over consensus estimates. The stock trades at six times forward earnings, significantly below the industry average, and has advanced more than 11% this year [16][17][18] Investment Strategy - The Zacks Rank methodology helps identify stocks with positive earnings estimate revisions, which can lead to better investment outcomes. Stocks with a Zacks Rank of 3 or better and a positive Earnings ESP have produced positive surprises 70% of the time [20] - JAZZ has a Zacks Rank of 1 and an Earnings ESP of +3.6%, indicating potential for another earnings beat in the upcoming Q1 results [21]

Core Viewpoint - The health care sector is leading the market in 2025, contrary to expectations regarding the new administration's impact on pharmaceutical stocks [1] Sector Performance - The S&P 500 Health Care sector has shown a year-to-date performance of 8.45%, outperforming other sectors such as Consumer Staples (8.23%) and Financials (6.83%) [2] - Despite the overall S&P 500 Index being down 0.54% for the year, 9 out of 11 sectors remain in positive territory [2] Market Dynamics - There has been significant sector rotation, with investors moving away from growth and technology stocks towards more defensive sectors like health care and utilities [3] - The Zacks Medical – Biomedical and Genetics industry is currently ranked in the top 29% of approximately 250 Zacks Ranked Industries, indicating strong relative strength [8] Stock Analysis - Gilead Sciences (GILD) is highlighted as a leading stock within the biomedical industry, with a diversified product pipeline and expected FDA approval for its Lenacapavir solution for HIV prevention [10] - Gilead Sciences has a Zacks Rank of 2 (Buy) and has exceeded earnings expectations in the last four quarters, averaging a positive EPS surprise of 19.5% [11] - The stock has appreciated over 65% in the past year and is making new 52-week highs [11] Investment Strategy - The Zacks Rank System is designed to help identify winning stocks and outperform the market by focusing on industries and stocks with positive earnings estimate revisions [6] - The emphasis is on investing in leading stocks to maximize potential returns, particularly in the current market environment characterized by volatility [5][13]