With Democratic presidential candidate Kamala Harris polling neck and neck with former President Donald Trump , Jefferies analysts assessed how her coverage positions may lead to particular inventory reactions throughout a number of business sectors. Based mostly on coverage proposals outlined within the 2024 Democratic Platform and Harris’ current statements on the marketing campaign path, Jefferies recognized people who “require minimal congressional motion” — that means they’re extra actionable and more likely to happen if she assumes the presidency. Check out a few of the insurance policies Jefferies highlighted and which particular shares it believes may very well be impacted. Meals and grocery regulation Harris has proposed stopping “company price-gouging” to be able to stem inflation. A Federal Commerce Fee report in March that investigated company earnings confirmed that revenue margins for grocery retailers elevated to 7% within the first three quarters of 2023, outpacing the group’s pre-pandemic excessive of 5.6%, in response to Jefferies. “She would designate new authority for the FTC and state attorneys common to research and levy new penalties on corporations that violate these guidelines,” the agency wrote in a analysis word on Monday. Snack makers Kellanova, Mondelez and Hershey may face headline dangers, the analysts mentioned. President Joe Biden has beforehand known as out snack corporations to cease partaking in “shrinkflation. ” These corporations would possible stay in focus as “speaking factors” as a consequence of their common merchandise. Nevertheless, Jefferies famous that the proposed rules “are more durable in actuality to implement.” MDLZ YTD mountain Mondelez shares yr to this point. The agency has a maintain ranking on Kellanova and Hershey , and a purchase ranking on Mondelez shares. Grocery shares Walmart , Costco Wholesale and Goal additionally face headline dangers from elevated scrutiny and regulation of revenue margin will increase. To make certain, they’ve already begun to work towards reducing prices, per Jefferies. “Notably, WMT has been operating deflationary in its Walmart US & Sam’s Membership segments as of the top of F2Q. Moreover, COST has been capable of drive flat pricing for a number of consecutive Qs, whereas TGT just lately introduced that it’s chopping costs on ~5,000 gadgets,” mentioned the agency. Analysts at Jefferies maintain a purchase ranking on all three grocers. Antitrust reinforcement Underneath a Harris presidency, the Democratic celebration’s dedication to antitrust enforcement is more likely to proceed by initiatives that embrace hospitals, media corporations and massive expertise names. Per Jefferies, the Division of Justice and the FTC raised 50 antitrust instances in 2022, which was the best stage for the reason that U.S. initiated pre-merger antitrust critiques in 1976. Pharmaceutical giants Bristol-Myers Squibb , Merck and Pfizer — which often make headlines for mergers and acquisitions – could encounter continued scrutiny. Jefferies analysts are bullish on Merck and Pfizer, with purchase rankings for each names. In the meantime, the agency is sticking to the sidelines with its maintain ranking on Bristol-Myers Squibb. MRK YTD mountain Merck shares yr to this point. Throughout well being methods, the Justice Division and the FTC have been energetic to curb giant mergers below the Biden administration. This may possible proceed below Harris, Jefferies forecasts, and should strain shares of Neighborhood Well being Programs , HCA Holdings and Tenet Healthcare . The agency holds a purchase ranking for the three health-care shares. Megacap tech names may expertise headwinds by elevated regulatory measures. Alphabet , which was just lately dominated to have violated antitrust regulation to monopolize its Google search engine, “is unlikely to profit from a change in administration,” Jefferies mentioned. Different massive tech shares resembling Meta , Amazon and Adobe could face hurdles in finishing mergers and acquisitions below a Harris administration, the agency added. Nonetheless, Jefferies is optimistic on the broader outlook for these tech shares. The agency has a purchase ranking for all 4 megacap tech names. Creating AI pointers Requirements for synthetic intelligence safety are anticipated to proceed if Harris turns into president. By the Biden-Harris administration’s government order 14110 , the AI Security Institute was created to ascertain AI insurance policies guaranteeing security. Music labels are positioned to doubtlessly profit below a Harris presidency, Jefferies mentioned. WMG YTD mountain Warner Music Group shares yr to this point. “We view a Kamala Harris presidency as doubtlessly favorable for content material/ IP house owners because the Democrats have already proposed new laws through the Generative AI Copyright Disclosure Act,” mentioned the agency. This regulation would defend music labels in opposition to content material duplication by AI and sure set up a brand new licensing income stream, in response to Jefferies. Analysts highlighted Warner Music and Common Music Group as names positioned to profit on this situation. Each shares are deemed a purchase from Jefferies analysts. Alternatively, restrictions on the rollout of AI options may inhibit semiconductor producers resembling Nvidia , Superior Micro Gadgets and Broadcom , in response to Jefferies. Analysts are retaining their purchase rankings on the chipmakers. —CNBC’s Michael Bloom contributed to this report.
