As mentioned yesterday, the coronavirus is picking up pace around the globe. With now more than 85,000 cases, mostly in China, but with one new home born case in the United States. Markets are off more than three percent by the end of day. We can most likely expect more downside to continue. As was previously mentioned, this will at some point turn around, and you don’t want to be trying to catch the falling knife. Find your favorite high volume stocks and start legging into positions. It can pay dividends in the future.
Per Marketwatch, this is what companies have been saying:
— Agilent Techonologies Inc. (A) expects earnings of 72 cents to 76 cents a share on revenue of $1.28 billion to $1.32 billion “after factoring in the potential impact” of the coronavirus. The lab instruments maker anticipates a $25 million to $50 million hit in the first half as a result of the virus; a $10 million loss in revenue in the first quarter and an estimated $15 million to $40 million impact in the second quarter. “Our performance was impacted by the extension of the Lunar New Year holiday due to the coronavirus,” CFO Robert McMahon said. “This reduced the number of shipping days in China.”
Read also: Consumer-facing companies will be the first hit if the coronavirus spreads across the U.S (http://www.marketwatch.com/story/consumer-facing-companies-will-be-first-to-take-a-hit-if-the-coronavirus-spreads-across-the-us-2020-02-26).
— Alcoa Corp. (AA), which makes aluminum products, said it is seeing supply chain bottlenecks in China for bauxite, caustic and coal gas that are lowering production. “It’s driving a shortage of alumina inside of China, which is then starting to see the Chinese alumina price increase and you see the knock-on impact in the rest of the world with prices also increasing, pricing up by about $20 per ton over these last few weeks,” CEO Roy Harvey told investors.
— Analog Devices Inc. (ADI) updated its guidance for second-quarter revenue of $1.35 billion, plus or minus $50 million. “While the effects of the coronavirus are difficult to estimate and the situation remains dynamic, we have reduced our revenue guidance by $70 million to account for its potential impact,” the company said in a statement.
— Apple Inc. (AAPL) is not expecting to meet second-quarter financial guidance because production has slowed or been halted in China due to the COVID-19 outbreak. “Work is starting to resume around the country, but we are experiencing a slower return to normal conditions than we had anticipated,” the company said in a statement on Monday. Apple generates about 15% of its revenue from China, and many of its products are manufactured there.
Read also: Apple’s coronavirus warning wasn’t a total surprise, but magnitude rattles Wall Street (http://www.marketwatch.com/story/apples-coronavirus-warning-wasnt-a-total-surprise-but-magnitude-rattles-wall-street-2020-02-18)
(http://www.marketwatch.com/story/coronavirus-update-more-than-73000-cases-1873-deaths-apple-warns-on-second-quarter-2020-02-18)– Best Buy Inc. (BBY), which sources a lot of its consumer electronics products from China, said it assumes that most of the impact from the coronavirus will happen during the first half of the year. “Therefore, we view this as a relatively short-term disruption that does not impact our long-term strategy and initiatives,” Chief Financial Officer Matt Bilunas said in a statement. “Our guidance ranges for both Q1 and the full year reflect our best estimates of the impacts at this time.” On the company’s earnings call, executives stressed that it was still a fluid situation and they are attempting to gauge when factories will be fully back up and running and whether global vendors have sufficient inventory.
— Boston Scientific Corp. (BSX), which has a $600 million business in China, is expecting a “negative first-half impact” on expectations that Chinese patients will push back elective medical procedures during the outbreak. The company lowered its quarterly sales guidance for the first quarter of 2020. The device maker now anticipates a “preliminary negative sales impact estimate of $10 million to $40 million.”
— Capri Holdings Ltd. (CPRI), which owns luxury brands Jimmy Choo and Versace, said it now expects (http://www.marketwatch.com/story/coronavirus-update-at-least-490-deaths-350-us-citizens-arriving-from-wuhan-and-nike-closes-half-of-its-stores-in-china-2020-02-05) annual revenue of $5.65 billion and adjusted earnings per share of $4.45 to $4.50 as the virus eats into sales. That’s below the FactSet consensus for revenue of $5.78 billion and per-share earnings of $4.87.
Read also: How much will COVID-19 hurt the U.S. economy? It’s anyone’s guess right now (http://www.marketwatch.com/story/how-much-will-covid-19-hurt-the-us-economy-its-anyones-guess-right-now-2020-02-12)
— Carnival Corp. (CCL) said there could be a fiscal 2020 earnings-per-share impact of 55 cents to 65 cents if all operations are suspended in Asia through the end of April. If that comes to pass, according to Carnival, there would be a material impact on the business from suspended cruises in Chinese ports; cancellations in other parts of Asia; and the impact on bookings, which is determined by the length of time that an event influences travel.
— The Coca-Cola Company (KO) said it is still expecting to reach its full-year guidance though COVID-19 will likely weigh on first-quarter results. Coca-Cola said it currently estimates an approximate 2- to 3-point impact to unit case volume, 1- to 2-point impact to organic revenue, and 1- to 2-penny impact to earnings per share for the first quarter. The Chinese market makes up 10% of Coca-Cola’s global volume, the company said in January. “China’s economy was in a different place when SARS happened,” CEO James Quincey said in January. “It’s worth noting that China’s economy is [now] much bigger, and this could become more connected to the rest of the world.” In its 10-K filing with the SEC, the company also said it has seen delays in the production and export of ingredients used in nonnutritive sweeteners. It doesn’t expect a hit to its full-year results for now.
— Crocs Inc. (CROX) expects first-quarter revenue to be hurt by $20 million to $30 million due to disruptions in Asia from the coronavirus. The casual shoe maker said many of its sellers in China remain closed, with those that are open seeing reduced operating hours and traffic, with traffic declines expanding throughout Asia.
— Domino’s Pizza Inc.(DPZ) said that fewer than 20 of its stores are closed in China and the outbreak is slowing down the openings of new stores in that market. Last year, Domino’s opened 80 net new stores in China.
— Ecolab Inc.(ECL), a water technology company, said it anticipates a 5 cents hit to EPS as a result of the outbreak. CEO Douglas Baker told investors that if COVID-19 becomes seasonal, like the flu, it may change some behaviors. “If you think if you go back to H1N1, that was really the advent of all the hand sanitizers you see in lobbies of all commercial buildings,” he said, on an earnings call. “Before that, it didn’t exist. So it clearly changed the demand permanently for hand sanitizing products, etc. You may well see that kind of outcome as a consequence of the coronavirus, too.”
— The Estée Lauder Cos. (EL) said the third quarter (http://www.marketwatch.com/story/coronavirus-update-565-deaths-more-than-28000-cases-worldwide-yum-china-reports-significant-interruption-2020-02-06) will be most impacted by the sales decline of luxury beauty products in China. The company updated its sales outlook for the second half of the year, saying it now predicts an increase of up to 1%, compared with the same period a year ago.
— Expedia Group Inc. (EXPE) is expecting a $30 million to $40 million impact on adjusted EBITDA in the first quarter as a result of the outbreak. It also expects “some impact beyond [the first quarter] in 2020 as well,” CEO Barry Diller told investors. “But the exact amount will depend on how long it takes for travel trends to normalize.”
— Fresh Del Monte Produce Inc. (FDP) CEO Mohammad Abu-Ghazaleh said port closures in China led to a slowdown in trucking and goods were left stacked up at ports over the extended Lunar New Year shutdown. He doesn’t expect the outbreak to fade away before April. “Usually these viruses, they don’t subside until the weather starts warming up, and then we will see the situation getting improved,” Abu-Ghazaleh told investors.
— General Mills Inc. (GIS) said half of its Häagen-Dazs shops in greater China are closed, and the shops that remain open have “severely restricted hours.” Greater China makes up 4% of General Mills’ net sales, 40% of its sales in the region are at Häagen-Dazs shops and other restaurants. The company told investors it can’t yet share how the closures will affect its numbers for fiscal 2020.
Keep a watchful eye of the news cycle to see if there are signs of improvement or continued spread of the coronavirus. Signs of improvement will spur a rapid move to the upside, as there is a major gap to fill back to recent highs.