As deal activity picks up, Bank of America has highlighted Domino’s Pizza and Universal Health Services as the most likely candidates for mergers and acquisitions. M&A activity slowed significantly in the years following the pandemic as the U.S. economy battled rising interest rates and inflation. There are now signs of optimism across the financial services industry as a more business-friendly regulatory environment revives activity. “U.S. M&A deals were down just 5% year over year through October, making this the best annualized year for M&A since 2021,” Bank of America strategist Jill Carey Hall said in a note Friday. “Factors supporting continued M&A include strong market returns, still cheap valuations for small- and large-cap stocks, reduced political and tariff uncertainty, and still narrow credit spreads.”Other analysts, including Wells Fargo’s Mike Mayo, echoed her sentiment. In an interview on CNBC’s “Power Lunch,” he said he expects a kind of “domino effect” to occur. “You can dream in this deregulated environment. This is a more pro-bank, pro-business, regulated environment, and it’s the most enriching environment we’ve ever had,” Mayo said. Bank of America’s Hall shared a list of S&P 500 large-cap stocks that reflect attractive characteristics for merger and acquisition candidates. Indeed, it’s not clear whether any of these companies are in talks or have been approached about a potential deal. Stocks included in the table below had to meet the following criteria: Transactions below the universe median of Bank of America’s recommended M&A valuation metrics, Free Cash Flow to Enterprise Value. Hall added that he excluded financial companies and managed care companies from the screen, noting that such names are often not comparable on this basis for structural reasons. Market capitalization is less than $15 billion. We have a stable profit track record based on S&P quality ranking (B or higher). We expect long-term growth rates to exceed the universe median. Domino’s Pizza was also on the list. The pizza chain’s stock price has fallen 2% this year. Last week, Mizuho initiated coverage of the name with an Outperform rating. “DPZ has implemented a clear value strategy that expands its relative value proposition and sustainably increases its traffic share. Its supply chain ownership significantly inhibits franchisee profitability and limits franchisee resistance to continuing to focus on value,” the bank wrote. Mizuho’s $500 price target suggests Domino’s shares could rise 25% from Friday’s closing price. Bank of America also emphasized universal health services. The healthcare management company’s stock price soared 28% in 2025. On Monday, Raymond James upgraded the company to an outperform market rating. The investment firm’s $270 price target is about 19% higher than Universal Health Services stock’s closing price on Friday. Raymond James analyst John Ransom said the company’s third-quarter results beat company expectations. “Please note that due to operational improvements and increased DPP, we are increasing our 2026 EBITDA estimates by ~7% and our 2027 EBITDA estimates by ~6%. Note that our 2026 and 2027 EBITDA estimates are ~1.6% and ~1.8% above consensus (adjusted), respectively,” he wrote. Other names on Bank of America’s list included Match Group, Bio-Techne and Paycom Software.
