Citi's Top Picks in Biotechnology and Diagnostics Sector

Investor interest in the biotechnology and diagnostics sector continues to grow. Citi analyst Patrick Donohue expects the sector to strengthen in the second half of 2026. According to his assessment, the market is being supported by improved sentiment toward artificial intelligence. Investors increasingly believe that this technology can accelerate the drug development process and attract new research investments.

Against this backdrop, Citi has highlighted several companies. Topping the list is Waters (WAT). In Waters' case, Citi focuses attention on the company's existing sales and the gradual replacement of equipment in laboratories, which drives demand growth.

Analysts are also drawing attention to West Pharmaceutical Services (WST). The company had a successful start to the year and continues to grow in the direction of biological drugs and biosimilars. The cyber attack that occurred in May had no significant impact on its annual indicators.

In the diagnostics direction, Citi's choice is Guardant Health (GH). The company maintains a strong position in the oncology screening market and expects growth in testing volumes against the backdrop of new medical regulations.

Among research organizations, Citi singled out Charles River Laboratories (CRL). In Citi's view, Charles River Laboratories will benefit the most if financing in the biotechnology sector increases. At the same time, risks stemming from artificial intelligence are relatively low for the company. This is precisely why Citi included its shares in the 90-day list with positive outlook.

Source: Investing.com