Catch up on the top industries and stocks that were impacted, or were predicted to be impacted, by the comments, actions and policies of President-elect Trump with this daily recap compiled by The Fly:
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WORLD CHANGED AFTER ELECTION: Roth MKM upgraded Tesla (TSLA) to Buy from Neutral with a price target of $380, up from $85, arguing that Musk’s “authentic support for Trump likely doubled Tesla’s pool of enthusiasts and lifted credibility for a demand inflection.” The firm, which says “the world has changed,” says Tesla’s main AI mission is a smarter copilot that “aims to solve orders of magnitude more chaos than other products” and contends that CyberTaxi now faces an accommodative regulatory environment, adding that one can now “daydream about a beautiful red wave of EVs sweeping across the US, with a shiny gold ‘T’ on every car.”
INVESTOR OPTIMISM: BofA says that its investor conversations suggest considerable optimism around U.S. economic outlook on the back of the Trump agenda. Importantly, banks viewed as significant beneficiaries of Trump’s business friendly policy priorities – deregulatory regime, increased M&A, lower taxes, pick-up in domestic capex. The firm believes that the potential for positive EPS revisions combined with improved valuation multiples support the case for bank stocks to outperform the S&P.
BofA believes Trump policy priorities combined with U.S. soft landing is bullish for bank stocks. While valuations are pricing in good news, regime shifts vs. post-GFC period, investor desire to add exposure and valuations that still screen attractively relative to potential for positive EPS revisions and compared to the S&P are all supportive of a continued move higher in bank stocks. The firm sees best value in MAG 5 GSIBs – Wells Fargo (WFC), JPMorgan (JPM), Goldman Sachs (GS), Morgan Stanley (MS); SMID-CAP regionals – First Horizon (FHN), Synovous Financial (SNV), Webster Financial (WBS), Western Alliance (WAL), and East West Bancorp (EWBC).
TARIFFS COULD PUSH PRICES: After President-elect Donald Trump revealed intentions to impose a 25% tariff on all imports from Mexico and Canada on his first day in office in January next year, Morgan Stanley estimated this would lead to risks of significant cost hikes on more than 2.7M vehicles imported to the U.S. market from Mexico and approximately 1M imported from Canada. The firm highlights an outsized impact on General Motors (GM), with 26% and 3% of U.S. sales imported from Mexico and Canada, respectively, and Ford (F), with 17% of U.S. sales imported from Mexico, as well as a number of Japanese, Korean and European peers. Morgan Stanley believes the ability of exposed automakers to pass on incremental cost hikes will be challenging given a U.S. consumer already facing average monthly auto payments near historic highs and believes OEMs would face the risk of either subsidizing the tariffs through lower margins or volume decline if the threatened tariffs are enacted.
STOCK RATING, PRICE TARGET CHANGES:
- UBS initiated coverage of Booz Allen (BAH), Leidos (LDOS) and SAIC (SAIC) with Neutral ratings and CACI (CACI) with a Buy rating as the firm initiates coverage on Government IT & Services stocks. Government austerity is not the firm’s base-case scenario in the current environment of elevated global geopolitical tension and rapid technological advancement, and the 20% de-rating in stocks since the election may ultimately prove overdone, but UBS sees more headline risk than re- rate potential over the next year and as a result, believes it is too early to broadly buy the selloff.
- BofA raised the firm’s price target on Citi (C) to $90 from $78, while keeping a Buy rating on the shares. Trump policy priorities should be a net positive and improved visibility around capital return and the 2025 revenue and expense outlooks should serve as catalysts to narrow the valuation gap, the firm tells investors.
- BofA raised the firm’s price target on Western Alliance (WAL), Texas Capital (TCBI), Synovus, First Horizon, East West Bancorp, and Cullen/Frost (CFR). The firm raised its price objectives by 8% on average for a selection of small-to-mid-cap banks to reflect an improving outlook driven by Trump policy priorities combined with a U.S. soft landing, which it calls “bullish for bank stocks.”
- Morgan Stanley raised the firm’s price target on nCino (NCNO) to $41 from $30 and kept an Equal Weight rating on the shares. The firm believes a Trump presidency could “serve as a real catalyst for demand unlock.”
- Oppenheimer raised the firm’s price target on FICO (FICO) to $2,515 from $2,324, while keeping an Outperform rating on the shares. The firm believes the election results will yield a net positive outcome for FICO.
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