Bank Of America Loves These 8 Stocks For Third Quarter—And Says To Dump These 2 Fast

Bank of America dropped its top 10 stock ideas for the third quarter of 2025, and the list includes some familiar names like Boeing Co. BA and Cisco Systems Inc. CSCO—but also a couple of bearish calls investors might not see coming.

While Wall Street debates rate cuts, BofA is sticking to one of the most hawkish forecasts out there: no Fed pivot until 2026.

Next year, the central bank is expected to slash rates by 100 basis points, but until then inflation is likely to remain sticky in the second half of this year due to tariffs, limiting policy flexibility.

This creates a trading environment where stock-specific catalysts matter more than macro tailwinds.

The updated list features eight Buy-rated stocks and two Underperform-rated names, all chosen for their potential to outperform—or underperform—due to major business or macro developments expected in the coming months.

The 8 Buys: From Aerospace to AI

1. Boeing Co. After a rough year of delays and scrutiny, BofA thinks Boeing is finally gaining altitude. "787 production is ramping, 737 deliveries are recovering, and positive changes to leadership including new CFO hire," said analyst Anthony Cassamassino. The firm sees upside as production hits 38 jets per month, and the new CFO—who came from Lockheed Martin Corp. LMT —adds stability. Bank of America set a price target of $260, which implies a 14% upside from Boeing's current price near $225.

2. Cisco Systems Inc. AI is fueling Cisco's momentum. "AI infrastructure orders YTD exceeded $1.3bn," already beating its full-year target, BofA wrote. With deep ties to Nvidia and a strong hold in enterprise switching, Cisco is positioned well as companies gear up for AI deployment. With shares trading around $68, BofA's $76 target suggests a 11% gain in the near term.

3. Datadog Inc. DDOG rounds out the AI-heavy picks. BofA likes Datadog's improving usage growth and its 8.5% AI-native revenue contribution, calling it one of the best-positioned software stocks for the next wave of generative AI adoption. BofA sees shares climbing to $150, offering about a 9% upside from the current level of $137.

4. Fair Isaac Corp. FICO. Despite some Washington noise around credit scoring, Cassamassino says, "FICO remains a best-in-class software compounder." With a $1 billion buyback plan and strong ACV growth, the firm gave a bold price target of $3,700, more than double the current price.

5. KeyCorp KEY is BofA's top value play in regional banking. A 5% yield, clean credit profile, and capital expenditure tailwinds give it a path higher. At a current price of $18.32, BofA's $20 target represents a 13% move higher.

6. Levi Strauss & Co. LEVI is on the list thanks to solid brand momentum and better-than-expected U.S. wholesale growth. "Execution remains strong across both denim and lifestyle apparel," BofA wrote.

7. Medtronic PLC MDT could be a breakout play if its new heart treatment technology gets greenlit. Cassamassino says approval of Pulse Field Ablation and renal denervation "could drive meaningful upside." BofA sees the stock climbing to $100, a 15% gain from its current price of $87.

8. Warner Bros. Discovery Inc. WBD. BofA sees the company's upcoming corporate split, Superman reboot and $2 billion debt reduction as key catalysts. At just $11.73 now, the stock could rally 40% to $16, if BofA's view plays out.

The Bear Calls: Hims & Hers and Conagra

Not every name on the list is a winner. BofA slapped Underperform ratings on two stocks it believes are overvalued or facing headwinds.

Hims & Hers Health Inc. HIMS has soared on buzz around compounded weight-loss drugs, but BofA says patent risks are being ignored. "Litigation risk is underappreciated," the analysts wrote, and growth in the company's base business is slowing. Target: $28, well below the stock's recent level near $50.

Conagra Brands Inc. CAG is the other short idea. Cassamassino sees a soft year ahead due to "rising protein costs and elasticity in frozen." Add in margin pressure and dividend risk, and BofA is skeptical the stock holds up.

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