Three sectors, three stocks: Freedom gives mid-cap ideas for next 12 months

Freedom Finance Global has highlighted several promising sectors for the next year, naming one mid-cap company in each that it believes deserves investor attention. The picks include a biotech focused on oncology, a software developer serving utility companies, and an investment bank.

The U.S. healthcare market is being shaped by several concurrent trends that could support its expansion. One of the most prominent is the continued surge in demand for weight-loss drugs. According to Morgan Stanley, the market for these drugs could reach $150 billion by 2035, a 42% increase from its previous estimate. Last year, total sales were estimated at around $15 billion.

Over the next 12 months, key drivers of the healthcare sector will include tariffs, pricing pressure on pharmaceutical companies, and Trump's Big Beautiful Bill tax law, said Vadim Merkulov, head of research at Freedom Finance Global.

Although the pharmaceutical segment faces uncertainty following Trump’s new executive order on prescription drug pricing, U.S.-focused biotech firms could benefit as pharmaceutical giants seek to refresh their product portfolios, Merkulov noted.

Incyte

Incyte Corp., a biotechnology company focused on treatments for oncology, inflammatory, and autoimmune diseases, generates most of its revenue from two flagship products: Jakafi, a therapy for several rare blood cancers, and Opzelura, a topical cream for atopic dermatitis. Freedom Finance Global has a 12-month target price of $83 per share for Incyte, implying upside of 20.5% versus the closing price yesterday, July 22.

According to Merkulov, the company has issued an overly conservative guidance for the year, and analysts believe there is room for upward revision by year-end. Incyte currently expects to generate just over $4 billion in net revenue in 2025, including approximately $2.9 billion from Jakafi sales, between $630 million and $670 million from Opzelura, and between $415 million and $455 million from its other oncology products.

The stock appears undervalued, with a 2.2 EV/sales ratio for the next 12 months, nearly half the average for the iShares Biotechnology ETF (IBB). Meanwhile, revenue is projected to grow at a double-digit pace over the next two years, Freedom Finance Global noted.

Still, only 14 of the 29 analysts covering Incyte rate the stock a "buy" or "overweight," according to MarketWatch. An equal number recommend holding the shares, while just one analyst has a "sell" rating. The average target price across all analysts is $76.15 per share.

Following strong gains across the tech sector, Freedom Finance Global expects tech stocks to advance another 3-4% through the end of 2025 and 7-9% over the next 12 months.

Since the beginning of the year, Nvidia shares have climbed nearly 24.5% to push its market capitalization past the $4 trillion mark. Shares of related companies are also surging: AI-focused cloud computing provider CoreWeave has seen its stock rise approximately 230% since January. The Technology Select Sector SPDR Fund (XLK), an ETF tracking tech stocks in the S&P 500, is up 12% year to date.

The summer of 2025 will be a key test of the AI rally’s staying power, particularly for software companies, Merkulov believes. For now, he noted, investors put a greater value on scalability than on current profitability.

ServiceTitan

ServiceTitan develops software for contractors across a range of industries. Its all-in-one AI-powered platform helps businesses manage nearly every aspect of operations, from inbound calls to field service visits. The market it operates in exceeds $1.5 trillion, according to Freedom Finance Global, which considers ServiceTitan a key player. The firm has a $125 per share target price on the stock, implying upside of about 10% over the next 12 months.

The company went public in December 2024, raising $625 million in its IPO.

Last year, ServiceTitan reported a positive adjusted operating margin for the first time, at 3.3%. According to Merkulov, that figure could rise above 25% in the coming years as the company scales and improves efficiency. This year, ServiceTitan has achieved sustainable positive cash flow, which should support, among other things, faster expansion through M&A.

The majority of analysts recommend buying ServiceTitan: 11 out of 16 have issued "buy" ratings, while the remainder advise to "hold," according to MarketWatch. The average target price is $126.70 per share.

Following the selloff in April, financial sector stocks have rebounded and are now outperforming the broader, generally overvalued market. The sector’s P/E ratio for the next 12 months has risen to 16.7, well above the 5-year average of 14.3 and the 10-year average of 13.5. At the same time, Freedom Finance Global has revised its expectations downward: It now expects earnings in the sector to rise 5.8% in 2025, while revenue is projected to grow 2.7%. Those figures are down from earlier forecasts of 7.3% and 4.9%, respectively.

Positive factors include proposed easing of capital requirements for banks and a pickup in capital markets activity, both of which are expected to support investment banks' performance. Meanwhile, regulatory liberalization around cryptocurrencies, including the recent passage of legislation to establish a legal framework for stablecoins, poses both a challenge to the traditional financial system, particularly large payment platforms, and an opportunity for expansion into new business lines.

Jefferies Financial Group

Jefferies Financial Group is a mid-sized investment bank with a market capitalization of $11.3 billion. The firm was formerly part of Leucadia National Corporation, a diversified holding company often referred to as a “baby Berkshire.” Over the past decade, Jefferies has undergone a significant strategic shift, divesting noncore, nonfinancial assets, such as beef processing, to concentrate on building out its financial and investment services business. Freedom Finance Global has a $70 per share target price for Jefferies, implying upside of approximately 24.5%.

Freedom expects favorable conditions for investment banking in the near term. Trading activity remains robust, with average daily volumes on the NYSE reaching multi-month highs in April and continuing to grow at double-digit rates in May and June. The M&A market is also showing signs of recovery following a cooling triggered by economic uncertainty and Trump's tariff rollout in March and April. According to Freedom Finance Global, M&A activity rose 25% in May and was up 11% year over year in the first two weeks of June.

In its second-quarter earnings, Jefferies highlighted a sharp rebound in trading momentum in May, as markets stabilized and investor confidence improved. Revenue from its investment banking division increased 6.4% for the quarter, and management expressed optimism about the outlook for the remainder of the year.

According to MarketWatch, two of the five analysts covering Jefferies rate the stock a "buy," two recommend "hold," and one has a "sell" rating. The average target price is $60.50 per share.

The AI translation of this story was reviewed by a human editor.