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Fly News Breaks for January 27, 2020
Jan 27, 2020 | 07:56 EDT
Credit Suisse analyst Michael Binetti notes that the new coronavirus thus far is much less widespread and less lethal versus SARS, with confirmed cases largely in China. Nonetheless, retail stocks with significant China exposure such as Estee Lauder (EL), Nike (NKE), and Tapestry (TPR) have started to underperform, he adds. Binetti's checks suggest that retailers are bracing for a disappointing Chinese New Year, with China now having a much bigger input to revenues/EPS for global brands. If Coronavirus continues, it could be a 3%-5% hit to EPS for China-exposed stocks like Nike/Estee Lauder next quarter in a "reasonable base case scenario," the analyst contends, adding that media "fear factor" could potentially drive relative P/E's another 10%-15% lower as well.