Small/Mid Cap Strategy: Best SMID Cap Ideas for 2H26

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Small/Mid Cap Strategy: Best SMID Cap Ideas for 2H26

namics seems overdone,

particularly with scripts trending positively. Even before the pullback, though, we’d argue Care Thefueledcompanyby its fouris addressingpillars: Arikayce,areas ofbrensocatib,high unmetTPIP,need,

the Street had started to embrace management’s ~$5bn peak guidance, which—together

Biotechnology INSM Insmed Inc Zemansky,Jason 22,141 459 103.46 214.00 and translational medicine. With Arikayce and

with Arikayce’s ~$1.5bn opportunity—implies a ~$16-20bn valuation. This effectively leaves Health Brinsupri already on the market, we see commercial

little credit for Insmed’s phase 3 Treprostinil palmitil inhalation powder (TPIP), despite its

synergies and established physician relationships

potential to take meaningful share of a Tyvaso market projected at ~$7bn. While it may take

putting Insmed in a good position for

a few sequentially positive catalysts for investors to re-engage, potential 2Q/3Q

commercialization of the clinical stage pipeline.

outperformance and favorable TPIP phase 2 open label extension (OLE) updates in 2H could

help spur a recovery.

Given their reliance on Medicare as the main payor, post-acute names have minimalSmall/Mid

Encompass is the largest provider of inpatient exposure to the cuts to exchanges and Medicaid that now start to pressure hospitals. EHC

Cap rehabilitative heath care services in the US, operating remains our top pick given this dynamic combined with a high visibility growth driven by

Encompass 147 inpatient rehabilitation hospitals (including joint denovos and bed additions. We see upside to EBITDA estimates on execution and expect

Health Care Facilities EHC Gajuk,Joanna 10,220 97 102.25 150.00

Health Corp venture hospitals) across 35 states and Puerto Rico.