Software stocks poised for growth after Trump’s presidential victory, KeyBanc says

KeyBanc Capital Markets indicated that software stocks are positioned for potential gains following Donald Trump’s victory in the US presidential election.

The company underlined that expected policy changes under Trump, such as a pro-growth and deregulation agenda, could promote more investment in the technology and software industries.

KeyBanc’s research identified the potential key driver of growth: lower corporate tax rates, as a result of which tax cuts would help companies with large tax liabilities, the company noted, promoting a more favorable environment for corporate growth and profitability.

With Donald Trump as president, we see a likely backdrop of lower corporate taxes, which would be generally positive for high-tax companies within our coverage, KeyBanc said.

However, KeyBanc warned of the likely dangers associated with trade policy. The paper discussed the importance of keeping an eye on potential tariffs, especially whether they would only affect China or have a more general application to other countries.

Additionally, we would be alert to possible tariffs and whether they only affect China or extend globally. Broadly speaking, we view the post-election outlook as neutral to positive for our broader software coverage, KeyBanc said.

Among the companies highlighted by KeyBanc as possible winners under the new environment following Trump’s victory are Synopsys (SNPS, Financials), Cadence Design Systems (CDNS, Financials), Workday (WDAY, Financials) and Autodesk (ADSK, Financials) .

This article first appeared on GuruFocus.