The S&P 500 is up more than 5 percent since Election Day, as investors have cheered President-elect Donald Trump’s pledge to reduce corporate taxes and regulations. However, not everyone is convinced of the benefits the Trump era will provide for investors.
On Thursday, Pivotal Research Group downgraded seven stocks based on the firm’s updated models.
“Political risks are higher now than three months ago, which should lead to capital-destroying uncertainty, higher costs of capital and lower valuations,” the firm wrote.
Pivotal believes Trump and the Republican Congress will likely implement some form of corporate tax cuts that should be almost universally beneficial to American companies.
Despite Trump’s negative rhetoric related to the proposed AT&T Inc. T 0.81% merger with Time Warner Inc TWX 0.24%, Pivotal feels the M&A environment will also generally be more flexible during Trump’s term in office.
Even with the potential benefits of Trump’s policies, Pivotal believes higher cost of capital should be the primary concern for investors.
“Mechanically applying new risk free rates to our models alongside lower long-term tax rates drive reductions in price targets almost universally across our coverage universe,” the firm added.
On Thursday, Pivotal downgraded…
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