Makers of protective clothing, video conferencing technology, and bleach among potential beneficiaries of outbreak
Here is a rundown of some companies that are expected to see positive impacts from the continuing global headlines revolving around the spread of the novel coronavirus, otherwise known as Covid-19.
When Alpha Pro Tech (APT) reported Q4 earnings results on February 26, the company said that "as a result of a surge in customer demand resulting from the outbreak of Covid-19, our overall gross margin is expected to be higher than normal in the first quarter of 2020 and potentially for the rest of the year, as gross margin on the N-95 face mask is significantly higher than our overall gross margin." On February 27, Alpha Pro Tec confirmed it had booked approximately $14.1M in orders for the company's N-95 face mask since January 27, an increase of $3.6M from the $10.4M reported as of February 13, 2020, and added demand for the product remained strong.
Lakeland Industries (LAKE), which also produces protective clothing, including disposable protective clothing, has also seen its stock rise amid continued headlines regarding the ongoing health scare related to the coronavirus.
Zoom Video (ZM), a provider of remote conferencing services using cloud computing, has seen its stock rise, possibly from investors' belief that increased travel restrictions inside and outside China due to the ongoing coronavirus outbreak could drive increased demand for online video conference calls. Earlier today, Facebook (FB) said it had "made the difficult decision to cancel the in-person component" of its F8 Developer conference "in light of the growing concerns around COVID-19." Earlier this month, Mobile World Congress, scheduled for February 24 to 27 in Barcelona, was cancelled after Facebook, Cisco (CSCO), Intel (INTC), Nvidia (NVDA), Sony (SNE) and AT&T (T) said they would not attend. As another example, The Wall Street Journal reported yesterday that Nestle (NSRGY) has asked hundreds of thousands of its world-wide employees to temporarily postpone all overseas business travel. The company is asking staff to curtail domestic travel, too, and to substitute trips with phone calls or video chats where possible.
JPMorgan analyst Paul Chung upgraded Logitech (LOGI) to Overweight from Neutral with a $48 price target, with the analyst expecting video conferencing momentum to continue given Logitech's dominant market share, and possible upside to webcam demand, given the indirect benefit from the coronavirus impacts as travel is restricted, and working from home is encouraged.
Teladoc (TDOC), a multinational telemedicine and virtual healthcare company based in the United States, has also seen its shares rise following a Centers for Disease Control and Prevention official saying that communities may need to increase the use of telehealth tools if the coronavirus continues to spread inside the U.S.
Peloton (PTON), an exercise equipment company, has seen its stock trade higher, with Needham analyst Laura Martin saying that the outbreak of coronavirus in South Korea, Italy, and Iran may prompt U.S. consumers to avoid public spaces like gyms and work out at home.
Also trading higher is bleach maker Clorox (CLX). In an interview on February 5, Clorox CEO Benno Dorer told CNBC's Jim Cramer that, "We do have products that can help combat the coronavirus, but we have not seen an impact on sales yet." Dorer noted that the company does not expect a shortage of inventory and would be ready to build inventory if the need arises. He stressed that they are profitable products but the company, "will not try to benefit from fears." Dorer said, "It's hard to speculate where the coronavirus will go, but we are positioned well for the back half of the year."
With the spread of the coronavirus in focus around the world, follow this link for a previous summary The Fly compiled of pharmaceutical companies working on diagnostic tests, vaccines, and drugs to treat the coronavirus.
Additionally, a number of companies have estimated the impact of the coronavirus on their businesses, with many updating their first quarter and fiscal year 2020 outlooks. Follow this link for a previous summary The Fly compiled of those companies.