The analysts expect food inflation to continue into the first half of next year and that grocery stores will continue to have the ability to pass price increases on to consumers. Downside risks include greater than expected headwinds in pharmacy, fuel and employee wages and benefits.
Meta Platforms
Meta Platforms Inc. (NASDAQ: META) is the newish name for the company that owns and operates Facebook, Instagram and Oculus, among others. BofA Analyst Justin Post has a Buy rating on the stock and a price objective of $233. He thinks Meta “has higher relative revenue stability compared to peers given breadth of advertisers, healthy margins that will minimize cash flow concerns, and significant cash on balance sheets to take advantage of stock dislocations with buybacks.”
BofA expects the company’s core advertising revenues to be roughly in-line with expectations, although there will be some pressure on growth and margins due to foreign exchange effects and some “headline-driven pullbacks.” Downside risks include (as always) a decline in user activity due to competition (mainly from TikTok, but also other social platforms), the company’s attempts to diversify may hit margins, privacy and regulatory issues and Wall Street’s potential “to assign a negative value to the company’s Metaverse investments.”
Pfizer
Dow Jones industrial average component Pfizer Inc. (NYSE: PFE) is the top defensive stock in BofA’s biopharma coverage. Analyst Geoff Meacham has a Buy rating on the shares, as well as a price objective of $70. The potential upside to Friday’s closing price of around $52.30 was 33.8%.
Meacham does not “think that COVID-19 boosters or vaccine reformulations offer much upside, we think the Paxlovid rollout has continued to drive revenue growth for Pfizer, especially given its convenient administration (oral therapy) and the continued healthcare focus on reducing the number of highisk patient hospitalizations.” Downside risks include lower sales and merger/acquisition transactions that are judged to be “value destructive.”
Progressive
Progressive Corp. (NYSE: PGR) is an insurance holding company offering personal and commercial insurance products, including auto, property and liability coverage. BofA analyst Joshua Shankar rates the stock at Buy and has a price objective of $136. Based on Friday’s closing price of around $118.50, the upside based on BofA’s target was 14.8%.
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