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Citi Names Top Life Science and Diagnostics Stocks for Second Half of 2026
Summary
A Citi analyst has identified top stock picks in the Life Science Tools & Diagnostics sector for the latter half of 2026, citing cautious optimism for a market recovery and a more positive view on the role of artificial intelligence.
According to a recent note from Citi analyst Patrick Donnelly, investor appetite is gradually returning to the Life Science Tools & Diagnostics sector following a challenging first quarter and initial concerns about disruption from artificial intelligence. The firm expressed cautious optimism for a recovery in the end-market heading into the second half of 2026.
Citi's outlook is partly based on a proprietary survey that examined ordering patterns and expectations for instrumentation and bioprocessing. The note also highlighted that sentiment regarding AI's impact on the sector is becoming more positive, with a growing view that AI could accelerate drug development and encourage reinvestment into research and development pipelines.
Among its top picks, Citi identified Waters Corporation (WAT) as its leading Life Science choice, citing the strength of its base business and an ongoing instrument replacement cycle. West Pharmaceutical Services (WST) was also highlighted following a strong first quarter, with management reportedly constructive on long-term revenue and margin opportunities. The note mentioned a May cyber-attack at WST is not expected to have a material impact on its financial results.
AdIn the Specialty Diagnostics category, Guardant Health (GH) was named Citi's top pick, with the analyst noting continued momentum in its Oncology and Screening businesses. For contract research organizations, Charles River Laboratories (CRL) was selected, positioned to benefit from a wave of biotech funding and possessing what Citi described as the largest moat against AI disruption. Citi also added CRL to its "upside 90-day Catalyst Watch."