The S&P 500 Might Be Overheated, but Bank of America Sees Value in These 2 Stocks

For the year-to-date, the S&P 500 has posted a gain of 17% and has been notching  record highs. The gains are even more impressive when we remember that the markets tanked this past spring; since that low point back in April, the index is up about 37%.

While those gains are fostering an optimistic mood on Wall Street, some voices are counseling caution. Writing from Bank of America, strategist Savita Subramanian notes that there are bearish signals out there, and that investors should take care.

“Our bear market signposts – the triggers that typically precede an S&P 500 peak – suggest additional caution. Today, 60% of our signposts are triggered, just below the average of 70% before prior market peaks… Historical comparisons are problematic, as today’s S&P is higher quality, asset light, less levered, etc. But risks are mounting and the valuation floor for the S&P 500 is likely lower than today’s levels… Be selective,” Subramanian opined.

That last line might be the key. Bank of America’s stock analysts are being selective – and they are selecting stocks where they still see value ahead. We’ve used the TipRanks platform to look up the broader Wall Street view on two of these BofA picks. Let’s dive in.

Doximity (DOCS)

We’ll start with a look at Doximity, a professional networking platform oriented toward the medical field and health-care industry. Doximity’s core user base is physicians and other direct care providers, who can use the platform to connect with each other, follow medical news, communicate via a secure app that is considered HIPAA-compliant, and even contact patients via video call. The company points out that modern medicine is mobile – and it has designed its platform to facilitate mobility in ways that benefit clinicians and patients.

Doximity bills itself as the largest online network for medical clinicians in the US healthcare sector. The company boasts that 80% of US physicians, as well as 50% of nurse practitioners and physician assistants, are verified members of the network. By connecting them, with the ease and convenience of a mobile app, Doximity makes it easier for medical professionals to collaborate on patient care and to disseminate new developments in the field.

The increase in demand for medical services over the past decade or more has forced providers to look for alternative ways to keep abreast of new developments, meet with patients, confer with specialists – and has expanded the field of telemedicine. The Doximity app, which allows providers to speak directly with patients via video link, streamlines the process. Providers can set online call appointments, tend to other work, and receive alerts as callers – patients or colleagues – enter the conversation.

All of this requires a solid tech backing, and in August of this year Doximity announced that it had acquired Pathway Medical, a Canadian company that specializes in developing medical AI and evidence-based clinical reference systems. Doximity paid $36 million for Pathway, and the acquisition brings the Montreal-based firm’s physician-centered AI and datasets into Doximity’s suite of assets.

On the financial side, Doximity reported results for fiscal 1Q26 this past August. The company kicked off its fiscal year with $145.9 million in revenue, a total that was up 15% year-over-year and came in $6.36 million ahead of the estimates. The company had a quarterly non-GAAP EPS of 36 cents, up from 28 cents one year earlier – and a nickel better than the forecast. Doximity also reported a 52% year-over-year increase in free cash flow, to $60.1 million.

Bank of America analyst Allen Lutz sees a shift in the healthcare industry as a net gain for Doximity. He notes that regulatory reforms are promoting ad spending toward provider channels – and that Doximity is perfectly positioned to reap gains from that trend. Lutz says of the company, “The FDA’s recent reforms to direct-to-consumer (DTC) advertising are adding friction in that channel, and pharmaceutical manufacturers are beginning to shift spend away from the DTC channel and toward the healthcare provider (HCP) channel. The combination of recent manufacturer decisions (Alnylam) and this quarter’s survey results gives us confidence that Doximity’s 4Q’25 budget flush will be significantly above Street expectations and that revenue growth can potentially accelerate in CY26. We see substantial upside revision risk with the Street currently expecting a three year revenue/EBITDA CAGR of 11%/12%, respectively.”

These comments support Lutz’s Buy rating on DOCS, while his $82 price target suggests that the stock will gain ~24.5% by this time next year. (To watch Lutz’s track record, click here)

Overall, the Moderate Buy consensus rating on Doximity shares is based on 17 reviews that include 10 to Buy, 5 to Hold, and 2 to Sell. The stock is currently trading for $65.82, and its $71.38 average target price implies a one-year gain of 8.5%. (See DOCS stock forecast)

Wayfair, Inc. (W)

Wayfair, the next stock on our list of Bank of America picks, is an online retail company known for its position in furniture, home goods, and soft lines. Wayfair has been in business since 2002, has a market cap of ~$13.3 billion, and generated $11.9 billion in revenue last year. The company is a global business, with more than 21 million active customers and upwards of 30 million home products in inventory. Wayfair is one of the world’s largest home-goods retailers and is based in Boston, Massachusetts.

Wayfair operates through a family of brands, including the AllModern, Birch Lane, Joss & Main, and Perigold names, as well as the eponymous Wayfair and Wayfair Professional brands. Under these names, the company sells everything from home improvements – think custom cabinets and lighting systems – to area rugs and other floor coverings, appliances, home décor, outdoor furnishings, and even pet supplies. The company’s customer-facing business is conducted both online and through branded brick-and-mortar stores in Massachusetts, Florida, Texas, and Illinois. The company’s online retail is supported by a widespread network of warehouses and delivery facilities. Wayfair provides delivery services in the US, UK, and Ireland.

In its last set of quarterly results, covering 3Q25, Wayfair reported that it had 21.2 million active customers, a total that was down 2.3% year-over-year. While the total customer figure was down, the company’s revenue per customer for the last twelve months (LTM) was up by 6.1% year-over-year, to $578. Orders delivered were also up in Q3, to 9.8 million, for a y/y increase of 5.4%. Of the company’s total orders in the quarter, 80.1% were placed by repeat customers.

The customer numbers show that Wayfair can rely on repeat business and that its customers are willing to spend more. Both of these trends had a positive effect on the company’s top and bottom lines in the quarter. Wayfair reported Q3 revenue of $3.1 billion, up nearly 7% year-over-year and beating the forecast by $90 million. The firm’s earnings in the quarter came to 70 cents per share on a non-GAAP basis. This was up from 22 cents per share in 3Q24 and beat the forecast by 26 cents per share. Wayfair had $1.17 billion in cash and cash-equivalent assets at the end of 3Q25, and including available credit had total liquidity of $1.7 billion.

Turning to the Bank of America view, we find analyst Michael McGovern upbeat on this company, basing his stance on its strong position and performance in the home goods niche.

“Over the long term, we see Wayfair as positioned to deliver strong share gains and earnings growth on a highly leverageable expense base and increasing gross margin. We see the potential for continued share gains as online penetration of the Home Goods category increases and Wayfair leans into a leading distribution network and growing product assortment… With notably cyclical industry still in a 3- Yr. trough, we like the entry point for eventual housing market improvement,” McGovern noted.

Quantifying this outlook, the BofA analyst rates W as a Buy, and he complements that with a $130 price target that implies an upside potential of 27% for the year ahead. (To watch McGovern’s track record, click here)

For the most part, Wall Street agrees with BofA’s call; Wayfair has earned a Moderate Buy consensus rating, based on 18 Buys and 10 Holds given in recent weeks. Wayfair shares are priced at $102.40 with a $112.22 average price target, indicating room for ~10% growth in the year ahead. (See W stock forecast)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.