Debt ceiling should benefit H&R Block, Equitrans Midstream, SoFi: BTIG says
Mikhail Makarov
BTIG Director of Policy Research Isaac Boltansky expects the debt ceiling agreement reached over the weekend to benefit several stocks, as it touches on the tax preparation industry, student loans, defense spending, and the energy industry.
Overall, he expects Congress will pass the legislation and President Joe Biden to sign it before the Treasury runs out of money on June 5. "The deal will face some headwinds as it winds its way through both chambers of Congress, and we should be prepared for headline volatility," Boltansky wrote in note to clients.
Specifically, he points to Intuit (NASDAQ:INTU), H&R Block (NYSE:HRB), Equitrans Midstream (NYSE:ETRN), and SoFi Technologies (NASDAQ:SOFI). 
The package's section expediting the approval of the Mountain Valley natural gas pipeline in West Virginia and Virginia bodes well for its lead developer, Equitrans Midstream (ETRN), Boltansky said. Its stock surged 40% in Tuesday premarket trading.
The proposed debt-ceiling legislation also ensures that student loan repayments will start up again in the fall. That augurs well for SoFi (SOFI) as it could lead to increased demand for student loan refinancing. SOFI stock gained 7.9% in premarket trading.
As part of the agreement, the $80B of new funding for the Internal Revenue Service that was included in the Inflation Reduction Act will be reduced by ~$20B. That "reduces the likelihood of the IRS building an expansive efile competitor," and spells a positive factor for Intuit (INTU) and H&R Block (HRB), he said. HRB gained 0.3% and rose 1.4% in premarket trading.
Defense contractors stand to gain as well since the debt ceiling pact agrees to ~3% increase in defense spending in FY2024, while non-defense discretionary spending will remain stable next year and rise by 1% in FY2025.
However, some of the big defense names are up modestly the bell on Tuesday: Raytheon Technologies (NYSE:RTX) +0.3%, Boeing (NYSE:BA) +0.2%, Lockheed Martin (NYSE:LMT) +0.4%, Transdigm Group (NYSE:TDG), +0.7%.
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