Q4 earnings season is mostly behind us with numbers having come in slightly better than expected, shaking off some concerns of a global growth slowdown. While the tone of the calls were generally positive, management expressed a new point of attention: the Coronavirus. As we noticed this thread developing, we decided to dig in deeper to determine its pervasiveness.
Earnings calls give some of the clearest insight into the mindset of management, and this window has offered insight surrounding the virus and thoughts on impact. Early calls expressed some worries, but limited concern as the situation was too early to accurately gauge consequences. Going forward, disruptions to global supply chains, particularly those with Chinese exposure, may increase and could potentially have sustained negative economic impact.
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As of February 3rd, about 20% of companies that had reported earnings mentioned possible consequences stemming from the virus.1 Consumer-facing companies expected the most direct negative impact while some industrial and semiconductor names anticipated possible impacts to production.
As earnings reports continued and infection numbers increased, so too did companies mentioning the Coronavirus. As of February 10th, 28% of companies reporting thus far this season mentioned the virus on their conference call.2 While it’s too early to determine the full impact of the virus, at this point concerns have certainly increased. With any luck, all will be resolved soon.
FOOTNOTES
1. Bank of America Global Research, “Earnings Tracker Week 3”, Feb 3, 2020
2. Bank of America Global Research, “Earnings Tracker Week 4”, Feb 10, 2020
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