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Investing.com -- Bank of America has unveiled its top 10 U.S. Ideas for the third quarter of 2025, featuring eight Buy-rated stocks and two Underperform calls across ten industries.
The list, updated quarterly, reflects BofA’s views on stocks with strong near-term catalysts amid a macro backdrop shaped by the Federal Reserve’s steady policy stance, ongoing trade uncertainty, and expectations for rising inflation in the second half of the year.
“Our economists continue to see the Fed on hold in ‘25 and delivering 100bps of cuts in ‘26,” BofA strategist Anthony Cassamassino said in a Tuesday note.
The forecast reflects anticipated inflation pressures driven by tariffs, while the labor market may face headwinds from immigration restrictions and trade-related uncertainty, though it is not expected to weaken significantly.
Against this backdrop, BofA highlighted 10 investment ideas for the U.S. market.
1) According to the bank, Boeing (NYSE:BA) is expected to benefit from recovering widebody aircraft demand and trade-related tailwinds. Cassamassino highlights a “300 aircraft demand shortage” and sees trade deals with countries like China and the U.K. as setting a precedent in Boeing’s favor.
2) Cisco Systems (NASDAQ:CSCO) is on the list as the network equipment maker continues to see momentum in AI infrastructure and enterprise networking. The company has already exceeded its $1 billion AI order target for full-year 2025 (FY25) and expects continued gains from its partnerships and security solutions.
3) Datadog (NASDAQ:DDOG) is BofA’s top software pick, citing its “durable 20%+ revenue growth and 20%+ free cash flow (FCF) margins,” as well as exposure to AI-native companies. The bank expects new products and strong execution to lift shares.
4) Fair Isaac (NYSE:FICO) remains a high-conviction call, driven by pricing power in its Scores business and potential upside from buybacks.
“FICO can continue to push price across its Scores division,” the note says, with special price increases likely.
5) KeyCorp (NYSE:KEY) is picked for its attractive valuation, 5% dividend yield, and potential upside from U.S. capex recovery and bank M&A. BofA sees it as “among the most compelling risk/reward in the super-regional bank space.”
6) Another BofA’s top pick for Q3 is Levi Strauss (NYSE:LEVI), backed by sales momentum, an improving wholesale channel, and minimal China exposure. BofA believes guidance may prove conservative and sees upside if the wholesale rebound continues.
“We think LEVI checks a lot of positive boxes: sales momentum coupled with a conservative revenue outlook, minimal China risk (sourcing and sales), an improving wholesale trajectory, a diversified supply chain, and a strong balance sheet,” Cassamassino wrote.
7) Meanwhile, Medtronic (NYSE:MDT) is seen as well-positioned for sequential growth led by its Pulse Field Ablation (PFA) and renal denervation segments. BofA’s EP market model suggests “over 100% upside to Street calendar 2026 EP estimates.”
8) Warner Bros Discovery (NASDAQ:WBD) also makes its way to the list, as BofA believes the media and entertainment giant could unlock value through its announced corporate split. BofA values Streaming & Studios at up to $26/share and sees catalysts in “transaction structure” and DC Universe relaunch.
9) Conagra Brands (NYSE:CAG) is one of the two Underperform-rated picks on this list, as margin pressure mounts from protein inflation and limited pricing power. BofA also warns of potential dividend risk “given it has a targeted dividend payout ratio of 50-55% of net income and on our estimates this would approach 70% in FY26.”
10) Hims Hers Health Inc (NYSE:HIMS) is the second Underperform pick. BofA flags litigation risk over compounded semaglutide and slowing core growth, saying the setup is unfavorable after “multi-month order shifts” pushed out churn effects.