Paul MacDonald’s Healthcare Picks for 2025: Merck, AbbVie, UnitedHealth

Paul MacDonald Highlights Healthcare Sector Resilience with Top Picks for 2025

Editorial Team (ET)May 9, 2025

Paul MacDonald, Chief Investment Officer and Portfolio Manager at Harvest Portfolios Group, has shared a strategic yet cautious outlook for the market in 2025. After two consecutive years of significant gains exceeding 20% in the broader markets, MacDonald raises a critical question: “What’s next?”

Four main factors dominate his analysis:

Soft Landing Achieved: Economic data indicates the U.S. Federal Reserve has successfully maneuvered a soft landing, avoiding major disruptions.
Earnings Reacceleration: Early in the earnings season, there’s evidence of robust growth across a wider range of sectors, signaling healthy market conditions.
Valuation and Returns: While valuations are historically high, they remain within acceptable ranges. Strong earnings performance justifies potential upward adjustments.
Policy Risk: The most significant variable remains policy uncertainty, particularly in a volatile geopolitical environment.

Diversification is central to MacDonald’s strategy. He points to overlooked sectors such as U.S. Industrials, benefiting from accelerating trends, and U.S. banks, gaining from deregulation and an improving economic backdrop. However, MacDonald’s sharpest focus lies on healthcare—a sector he believes is undervalued yet brimming with long-term growth potential.

Why Healthcare Stocks Are Poised for a Comeback

Despite lagging performance in recent years, MacDonald argues that healthcare remains a defensive sector with strong fundamentals. Aging populations, growing demand in developing markets, and rapid technological innovation create a solid foundation for sustained growth. Moreover, recent dips in healthcare valuations present attractive entry points for investors. The defensive characteristics of healthcare stocks make them a key component of any diversified portfolio, particularly as broader markets shift focus from growth-driven sectors.

Top Picks: Merck, AbbVie, and UnitedHealth Group

Paul MacDonald has identified three top healthcare stocks that exemplify the sector’s resilience and growth potential.

Merck & Co. (MRK NYSE)

Merck has been a cornerstone of MacDonald’s portfolio for over five years. The pharmaceutical giant boasts a diversified business model spanning oncology, vaccines, animal health, and diabetes treatments. Its flagship immuno-oncology drug, Keytruda, continues to deliver impressive results, with new delivery mechanisms and research developments mitigating concerns about future competition.

Merck’s strategic acquisitions and licensing agreements are beginning to pay off, particularly in the vaccine segment. MacDonald highlights robust growth opportunities in both North America and China, solidifying Merck’s position as a long-term winner in the healthcare space.

AbbVie (ABBV NASD)

AbbVie, another long-standing position in MacDonald’s portfolio, has successfully navigated challenges posed by the patent expiration of its blockbuster drug, Humira. While Humira’s revenue decline was expected, AbbVie’s strong pipeline of new drugs, including Skyrizi and Rinvoq, alongside its aesthetics, oncology, and neuroscience platforms, ensures continued earnings growth.

MacDonald views the recent pullback in AbbVie’s stock—triggered by a missed trial—as an excellent entry point for medium- to long-term investors. With double-digit EPS growth projected through 2030, AbbVie remains a compelling investment.

UnitedHealth Group (UNH NYSE)

As the largest health insurer in the U.S., UnitedHealth Group covers approximately 50 million lives. Its vertically integrated business model and diversified operations position it as a critical player in the healthcare ecosystem.

While recent policy risks and post-COVID recalibrations have weighed on the stock, MacDonald sees this as a buying opportunity. Valuations are now highly attractive, and UnitedHealth’s core role in U.S. healthcare delivery makes it a dependable choice for long-term investors.

Conclusion: A Long-Term Perspective on Healthcare

Paul MacDonald’s top picks—Merck, AbbVie, and UnitedHealth Group—underscore his belief in the enduring value of the healthcare sector. Despite short-term challenges, the sector’s non-cyclical drivers, such as aging populations and technological advancements, ensure its relevance and resilience.

For investors seeking diversification and defensive growth, these large-cap healthcare stocks offer a compelling opportunity. As MacDonald notes, the current market environment rewards those who can identify undervalued sectors with strong fundamentals.

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