The coronavirus eruption has crippled China, with 2,788 reported deaths and 335 new confirmed cases, as of Feb 28. In fact, investors are fretting over the new infections and deaths reported around the world. Notably, the Dow Jones Industrial Average has shed more than 1,000 points, thus creating an air of uncertainty about global markets.
U.S. stocks also tumbled for the sixth straight day yesterday, slipping to the lowest level since last October. Further, tech behemoths like Microsoft MSFT and Apple AAPL slashed their growth outlooks — clearly a sign that COVID-19 will have a larger-than-anticipated impact on global business.
Let’s take a look at the effects of the breakout.
Key Players at Risk
U.S. President Donald Trump has acknowledged that this acute outbreak will dent growth. Notably, impact on the aviation, hospitality and retail sectors may lower consumer spending.
Due to significant exposure to China, many key players in the United States have been hit hard. These include the likes of Starbucks SBUX, Nike NKE, United Airlines Holdings and Walmart. For instance, Nike-owned stores in China have been shut, which weighed on the company’s revenues in the fiscal third quarter.
MarketWatch suggests that consumer-facing companies are the worst-hit as during times like these, public spaces are best avoided.
Adding to the glum, a report by The Guardian suggests that the global economy might lose more than $1 trillion.
A Boon for a Few
The outbreak seemed to have acted as a boon for some players in the United States, calming investors to an extent. Notably, the N95 mask manufacturer 3M has seen a surge in revenues after nine straight quarters of dismal performance.
Also, at a federal level, the Centers for Disease Control and Prevention (“CDC”) has been issuing guidance to healthcare workers, developing diagnostic tests to rapidly detect the virus and implementing screening procedures everywhere.
Here we pick a few stocks which have been rallying ever since the outbreak, thanks to their efforts to curb the same.
Investors might be interested in keeping an eye on these three stocks, carrying Zacks Ranks #2 (Buy) or 3 (Hold), which have had an impressive run on the bourses over the past month. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
QIAGEN N.V. QGEN tops our list. The Zacks Rank #3 company recently announced the shipping of its newly-developed QIAstat-Dx Respiratory Panel 2019-nCoV test kit to four hospitals in China for evaluation. Notably, the company has been providing instruments and consumables to support detection of the virus since January.
The new kit adds to the company’s molecular testing offerings. Moreover, QIAGEN is in the process of shipping the kits to public health institutions in other regions, including Europe, South-East Asia and the Middle East.
Over the past month, the stock has rallied 6.4%, outperforming the industry’s 1.6% rise.
Internet and software player Zoom Video Communications ZM has also been gaining from the current situation, thanks to a boost in downloads as workers start to exercise more caution. As more people turn to the company’s remote-work tools like videoconferencing, Zoom Video’s average daily downloads are up 90% over the past month.
The company’s shares have rallied 54.4% against the industry’s 2.6% decline over the same time frame.
Investors may also consider specialty biopharmaceutical company Novavax, Inc. NVAX. It recently announced the start of animal testing for a potential coronavirus vaccine. Management at Novavax stated that human testing for the vaccine will begin by the end of spring 2020. Earlier, the company had developed a novel Middle East Respiratory Syndrome vaccine.
Over the past month, the Zacks Rank #2 stock has skyrocketed 72.6% compared with the industry’s 1.6% rise.
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