BofA’s top 10 ideas for the fourth quarter

BofA Securities analysts presented their top 10 stock ideas for the last quarter, with nine longs and one short.

These stocks are expected to have significant market and business-related catalysts in the fourth quarter.

Technical strategist Stephen Suttmeier said he expects a stronger rest of the year, “albeit not without volatility,” as he believes the S&P 500 (SP500) should reach 5,930.

Nine long ideas, all buy-rated:

AutoNation Inc. (AN) – Price target: $220

The stock “should benefit from an improving new vehicle sales cycle driven by pent up demand and continue to produce strong cash flow that is re-deployed towards accretive share buybacks.”

Dynatrace (DT) – Price target: $68

Analysts believe that the stock’s catalyst is “constant currency ARR (annual recurring revenue) growth,” and forecast about 19% year-over-year for 2025. The company is also expected to generate meaningful free cash flow at a margin of 30% pre-tax,

Hasbro (HAS) – Price target: $90

The company is well positioned for upward estimate revisions due to its collectible trading card business suggesting strong momentum, high store visits heading into the holidays, continued strong high margins from digital gaming, and Monopoly Go! royalties.

Johnson Controls (JCI) – Price target: $95

“Given its leading position in data centers HVAC we anticipate Johnson Controls to benefit from further revenue and orders related to data centers in the quarter,” analysts said.

Spotify (SPOT) – Price target: $430

The company’s recent performance and third quarter guidance shows a positive trajectory on gross margins, operating income and free cash flow, analysts said. The company is also “at an inflection point…which is driving outsized share price performance.”

Starbucks (SBUX) – Price target: $118

“We see the opportunity for changes in marketing content/channels to have an immediate impact with more significant adjustments to build momentum over time,” analysts said. “Longer term, we like the optionality of a potential China business spin, which we think would buoy Starbucks (SBUX) returns and its multiple.”

United Airlines (UAL) – Price target: $70

Analysts see tailwinds emerging across the airline industry with declines in fuel prices to boost earnings. Also, “domestic industry supply exceeded demand through much of the summer before approaching the lowest levels of the year in August and September.” Analysts see these dynamics continuing this quarter.

Walmart (WMT) – Price target: $85

“We think a shortened selling season (5 fewer days between Thanksgiving and Christmas vs. last year) will likely lead to higher online spend, favoring large digital/omni-channel players like Walmart (WMT) that offer a broad range of fast/convenient fulfillment options.”

Wells Fargo (WFC) – Price target: $70

The company “is uniquely positioned among the U.S. GSIB (global systematically important banks) to have a secular growth opportunity across under penetrated businesses ranging from capital markets to credit cards to wealth management.”

Short idea, underperform-rated:

FMC Corp. (FMC) – Price target: $57

Analysts see risk to the fourth quarter guide here due to challenging farmer economics, especially in South America. “While earnings should grow next year off a very weak 2024, we expect profitability to remain challenged in 2025 as poor agriculture fundamentals pressure both volumes and price.”