Trump Trade: Analyst Says Trump’s Win Is ‘Not As Positive As You’d Think’ For Tesla

Check out the top industries and stocks that have been or are expected to be affected by President-elect Trump’s comments, actions and policies in this daily roundup compiled by The Fly:

NOT AS POSITIVE AS THINKED: Barclays says Tesla shares rebound after election (TSLA) reflects a “strong disconnect” between the stock and the company’s fundamentals. Technical factors and options are playing an outsized role in the rally, the company told investors in a research note. Barclays believes Tesla shares are now performing best compared to cryptocurrencies. The election has had little positive impact on Tesla’s fundamentals, but the premium for Elon Musk is now increased, the company claims. The last six weeks “serve as a reminder that Tesla remains a narrative king in the market, regardless of fundamentals,” Barclays claims. While consensus estimates for 2025 earnings have risen slightly over the past six weeks, Tesla’s multiple has risen to a “frothy” 145x 2025 numbers, up from 80x just before the election, the company points out. It says Trump’s assessment of Tesla’s fundamentals “is not as positive as you might think.” Barclays maintains its Equal Weight rating on Tesla with a price target of $270.

COMMENTS ON PBMS: Barclays said that while the existential risk to pharmacy benefit managers was low, President-elect Trump’s comments this week suggested additional headline risk and greater support for the legislation. Trump said he plans to “cut out the middleman,” the latest in a string of negative headlines that sent PBM-owned Cigna’s shares soaring (CI), CVS Health (CVS) and UnitedHealth (UNH) lower, the company told investors in a research note. Barclays believes that PBMs are “the only market-based control over drug prices that exists today,” and eliminating the “middleman” would effectively give the government responsibility for negotiating drug prices for both private and government-sponsored health plans.

Trump said: “The terrible middleman who, frankly, makes more money than the drug companies and who does nothing but be a middleman, we’re going to cut him out.” Barclays reviewed this and found that the average EBIT margin of the six The largest US pharmaceutical companies are 37%, almost 8 to 10 times the PBM margins, which are closer to 3 to 5%. Four of the six largest drug manufacturers, Johnson & Johnson (JNJ), AbbVie (ABBV), Merck (MRK), Pfizer (According to Barclays, PFEs are expected to generate more operating profits this year than the Big Three PBMs combined.

MOST AT RISK FROM DOGE: According to Deutsche Bank, increasing awareness of the U.S. government’s Department of Government Efficiency program has led to a resurgence in news and research focused on the interaction between the Veterans Health Administration health care system and Medicare plans. The thesis is that there are many veterans enrolled in Medicare Advantage plans who do not use traditional health care services and instead rely on Veterans Affairs for health care, the company tells investors in a research note. Deutsche further points out that the government ultimately pays for these veterans’ care twice, through Veterans Affairs and Medicare premiums. “Government efficiency experts see this duplication as an opportunity for the DOGE program proposed by the new president,” it continued. The company sees Humana (HUM) as the most endangered. According to Health Affairs, in 2020, the Centers for Medicare and Medicaid Services paid more than $1.32 billion to Medicare Advantage plans for Veterans Affairs enrollees who did not use Medicare services. Assuming an 8% year-over-year growth rate, estimated payments for these plans could reach about $1.86 billion by 2024, Deutsche Bank said.

DISNEY settlement: When Disney (DIS) reached a settlement with Donald Trump in his defamation case against ABC News, many accused the company of pandering to him, and media law experts predicted the move would encourage Trump to file more lawsuits pushing the boundaries of the First Amendment could be put to the test, reports Brooks Barnes of the New York Times. Although Disney expected the backlash, they also concluded that they had a flawed case and could risk jeopardizing press protections for everyone if they continued to fight.

RATING CHANGES:

Baird demoted Rivian Automotive (RIVN) from Outperform to Neutral with a price target of $16 (previously $18). The company expects the landscape for both electric vehicles and renewable energy to become more challenging in the near term due to uncertainty surrounding the Inflation Reduction Act and growth in 2025. Rivian has few catalysts in 2025 and shares will “decline with electric vehicle sales,” the company tells investors in a research note.

Baird was also demoted Fluence energy (FLNC) from Outperform to Neutral with a price target of $20 (up from $24), expressing the same IRA concerns. The company sees a “rapidly changing geopolitical landscape” following the US election.

Goldman Sachs has upgraded MSCI (MSCI) to Buy Neutral with a price target of $723 (previously $617). The firm expects positive momentum to continue into 2025 as equity returns expand beyond the large-cap technology sector under a Trump administration.

Litchfield Hills began reporting on Formation minerals (FOMI) with a Buy rating and a price target of $2. The company expects the new government to reduce or eliminate electric vehicle regulations, removing downward pressure on oil prices.