With Democratic presidential candidate Kamala Harris polling neck-and-neck with former President Donald Trump, Jefferies analysts assess how her policy stance will lead to Specific stock reactions across multiple industry sectors. Based on the policy proposals outlined in the 2024 Democratic platform and Harris’ recent statements on the campaign trail, Jeffries identified those that “require minimal congressional action,” meaning they are more viable if she becomes president. operational and more likely to be implemented. Take a look at some of the policies Jefferies highlighted and the specific stocks it believes could be affected. Food and Grocery Oversight Harris proposes preventing “corporate price gouging” to curb inflation. Jefferies said a U.S. Federal Trade Commission report examining corporate earnings in March showed that grocery retailers’ profit margins increased to 7% in the first three quarters of 2023, surpassing the group’s pre-pandemic profit margins. A high of 5.6%. “She will designate new powers for the FTC and state attorneys general to investigate and impose new penalties on companies that violate these rules,” the company wrote in a research note on Monday. Snacks, analysts said Manufacturers Kellanova, Mondelez and Hershey could face significant risks. President Joe Biden has previously called on snack companies to stop engaging in “deflationary inflation.” However, Jeffries noted that the proposed regulations are “actually more difficult to implement.” MDLZ YTD Mountain Mondelez stock year-to-date. The firm has a hold rating on Kellanova and Hershey shares and a buy rating on Mondelez stock. Grocery stocks Walmart, Costco Wholesale and Target also face overall risks from increased scrutiny and regulation as margins increase. Jeffries said that to be sure, they have begun working to reduce costs. “It’s worth noting that WMT’s Walmart U.S. and Sam’s Club businesses have been in a deflationary position as of the end of the second quarter. Additionally, COST has been able to drive prices flat for several quarters, while TGT recently announced it would cut prices on approximately 5,000 items ,” the company said. Analysts at Jefferies maintain buy ratings on all three grocers. Strengthening antitrust During a Harris presidency, Democrats are likely to continue their commitment to antitrust enforcement through initiatives that include hospitals, media companies and big tech companies. Jeffries said that the Department of Justice and the Federal Trade Commission filed 50 antitrust cases in 2022, which is the highest level since the United States launched pre-merger antitrust review in 1976. Mergers and acquisitions that often make headlines – are likely to encounter ongoing scrutiny. Analysts at Jefferies are bullish on Merck and Pfizer, giving both companies buy ratings. Meanwhile, the company remains on the sidelines with a hold rating on Bristol-Myers Squibb. MRK YTD Mountain Merck stock year-to-date. Across the health system, the Justice Department and the Federal Trade Commission have been aggressive in curbing large mergers under the Biden administration. Jefferies predicts this situation is likely to persist and could put pressure on shares of Community Health Systems, HCA Holdings and Tenet Healthcare. The firm maintains a buy rating on three healthcare stocks. Big tech companies may also face headwinds from increased regulatory measures. Alphabet, which was recently found guilty of violating antitrust laws by monopolizing its Google search engine, is “unlikely to benefit from a change of government,” Jeffries said. The company added that other big tech stocks such as Meta, Amazon and Adobe may face obstacles in completing mergers and acquisitions under the Harris administration. Still, Jefferies is optimistic about the overall outlook for these tech stocks. The firm has a buy rating on all four major technology companies. Developing AI Guidelines If Harris becomes president, AI safety standards are expected to continue. Through Executive Order 14110 of the Biden-Harris administration, the AI Security Institute was established to develop AI policies that ensure security. Jeffries said music labels expect to benefit during Harris’s presidency. WMG YTD Mountain Warner Music Group stock year-to-date. “We believe a Kamala Harris presidency could be beneficial to content/IP owners as Democrats have introduced new legislation with the Generating Artificial Intelligence Copyright Disclosure Act,” the company said. Jeffries said this The law would protect music labels from artificial intelligence copying of content and potentially create new streams of licensing revenue. Analysts highlighted that Warner Music and Universal Music Group are expected to benefit from this situation. Both stocks are considered Buys by Jefferies analysts. On the other hand, Jefferies said restrictions on the rollout of artificial intelligence capabilities could inhibit the growth of semiconductor manufacturers such as Nvidia, Advanced Micro Devices and Broadcom. Analysts maintained a buy rating on the chipmaker. —CNBC’s Michael Bloom contributed to this report.
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