2 Beaten-Down Stocks That Could Bounce Back in 2026

One great way to earn above-average market returns is to identify stocks that aren't performing well -- even as broader equities are moving higher -- but could eventually rebound. There are plenty of candidates to pick from as the stock market closes out another solid year.

Two beaten-down stocks worth considering for 2026 are Viking Therapeutics (NASDAQ: VKTX) and Zoetis (NYSE: ZTS). Both of these healthcare-focused corporations moved in the wrong direction in 2025, but things could be very different for them over the next 12 months.

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1. Viking Therapeutics

Let's first get one point out of the way. Viking Therapeutics is a clinical-stage biotech company and those tend to be at least a bit riskier than average. A lot could go wrong for the company that would sink its share price. However, for those with an elevated appetite for risk, there could be massive upside potential here. Viking isn't like most pre-revenue drugmakers. It has produced strong phase 2 results for a candidate in the hottest therapeutic area in the industry: weight management.

The company's VK2735, an investigational GLP-1 anti-obesity medicine, is now in phase 3 studies. And next year, Viking Therapeutics could announce some data from this clinical trial. If it is successful, and based on mid-stage results, there is a good chance that Viking's shares will soar. Further, the biotech is developing an oral formulation of VK2735.

So, Viking Therapeutics is moving forward with these programs that could eventually join the fast-growing market for weight loss drugs and generate blockbuster sales. Viking's shares moved in the wrong direction this year for at least two reasons. First, after the stock's strong performance in 2024, some investors decided to cash in on their profits. Second, the mid-stage results of oral VK2735 were marred by high rates of patient dropouts due to severe adverse reactions.

In my view, Viking Therapeutics can address this issue, especially since oral VK2735's efficacy in the study was strong. The highest doses of the medicine caused the most adverse reactions, but lower doses also seemed commercially viable. In short, Viking's highly promising assets in weight management could enable it to rebound through strong clinical and regulatory progress, potentially as early as next year. That's why the stock is worth considering today.

2. Zoetis

Zoetis is a leading animal health company with a vast portfolio of products. The company's work in its companion animal segment is its most important growth driver.

However, this year, two of its medicines have encountered significant issues. Librela and Solensia are indicated to treat osteoarthritis (OA) pain in dogs and cats, respectively. There have been reports of severe adverse reactions, and both are subject to ongoing regulatory scrutiny. These dynamics have impacted Zoetis' financial results and stock price.

Could the stock rebound in 2026 even as this challenge remains? My view is that it could. Zoetis entered 2025 facing increased competition within its all-important dermatology franchise, particularly for Apoquel, a medication indicated for treating allergic itch in dogs. Zoetis has effectively managed that threat, and dermatology remains a key growth driver for the company.

Moreover, Zoetis still sees significant room for growth, as millions of dogs remain untreated or under-treated, providing it with ample opportunities to grow its sales. Further, newer approvals, particularly in areas that were a challenge for the company in 2025, could help turn the tide. Zoetis announced the approval of Lenivia for OA pain in dogs in Canada and Europe.

Lenivia's advantage over Librela is that it is a longer-acting medicine, thereby reducing the number of visits to the vet. Portela, for the long-acting analog of Lenivia for OA pain in cats, also earned approval in Europe. Both could gain traction next year, help Zoetis move beyond its recent issues, and jolt the stock.

Even if that doesn't happen in 2026, though, Zoetis is a terrific long-term option. It leads the animal health industry, has proven innovative abilities and a substantial portfolio, generates consistent earnings, and has been growing its dividends at a steady rate. The company's payouts have increased by 458% over the past decade.

Prosper Junior Bakiny has positions in Viking Therapeutics. The Motley Fool has positions in and recommends Zoetis. The Motley Fool recommends Viking Therapeutics. The Motley Fool has a disclosure policy.