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The Wall Street Bull sculpture is seen in the Financial District on December 8, 2016 in New York.
“By our estimate a tax cut is 20 to 40 percent priced, a little more after today,” Parker said on CNBC’s “Halftime Report.”
Parker said the S&P 500 could see a 9.5 percent earnings boost from a 20 percent tax rate, and he has not yet priced that into his model. That could help drive the S&P much higher than his official target of 2,900, even as high as 3,300 — a 25 percent gain from current levels.
He said the biggest beneficiaries of lower tax rates include telecom, financials and consumer discretionary companies, and they typically have price-to-earnings ratios that are at a discount to the S&P.
Tech has been selling off in recent sessions and it took the Nasdaq lower Monday, as the Dow, and S&P 500 charged ahead. Parker said semiconductors have been under the most pressure because they don’t benefit much from the lower tax rate.
He said in tech, services and software should fare better than semiconductors, particularly since there is an incentive for corporate capital spending.
“As we’ve been trying to digest the details of the House and Senate plans, there are risks around offshore earnings,” he said. Companies will fall under a new territorial tax plan that does not tax overseas earnings but the Senate bill includes a tax on overseas income from intangibles.