Coronavirus-Affected MedTech Drags S&P 500 Index Down

The pandemonium surrounding coronavirus has reached a grave level, with China reporting 19 new confirmed cases and 17 more deaths as of Mar 9, 2020, per the country’s National Health Commission’s data published in a report by CNBC. Taking this into account, the total number of cases now stands at 80,754, with 3,136 deaths to date.

Moreover, the novel coronavirus has spread throughout the world since the first cases were detected in central China in December. According to a report by CNN, more than 4,000 people have died globally and 113,000 have been infected during this pandemic. In fact, a total lockdown in Italy has come into force, with the number of confirmed cases in Europe on the rise.

Well, the United States is not far behind. According to a report by The New York Times, coronavirus cases have exceeded 500 in the United States, with deaths rising to 22.

Notably, a report by The Guardian suggests that the global economy might lose more than $1 trillion in 2020.

Panic triggered by the escalating coronavirus epidemic has been weighing heavily on investors by sending markets into frenzy.



Major Market Indices Take a Hit

For the past several weeks, Wall Street has been facing heavy losses due to fears surrounding the coronavirus outbreak. Notably, the last week of February was particularly bad for U.S. stocks, since the financial crisis and economic disruption caused by this virus has not shown signs of slowing down.

According to The Guardian, on Mar 9, the global stock markets witnessed their steepest fall since the 2008 financial crisis. This was due to the implosion of an alliance between The Organization of the Petroleum Exporting Countries and Russia that resulted in the worst one-day crash in crude prices in about 30 years. This of course amplified concerns about rising economic cost of the coronavirus outbreak.

Per a report by CNN, the S&P 500 Index fell about 6% and the Nasdaq Composite declined 5.4%. The Dow Jones fell as many as 2,046 points for the first time ever, reflecting a decline of 7.8%. Trading on Wall Street had to be halted within minutes of the market opening as the system to buy and sell shares failed to keep pace with events.

Medical Devices Market Bears the Brunt Too

Within the U.S. medical devices space, there are many S&P 500 stocks that have been displaying weak performance over the past several weeks, thanks to the coronavirus outbreak, contributing significantly to the overall decline of the aforementioned market indices.

First up is the Zacks Rank #2 (Buy) specialty medical device company, The Cooper Companies, Inc. (NYSE:COO) . On first-quarter fiscal 2020 earnings call, the company stated that it expects $15-million negative impact from the coronavirus outbreak in fiscal second-quarter 2020. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Over the past couple of weeks, the company’s shares have underperformed the S&P 500 Index. The stock has declined 8.5% compared with the index’s fall of 7.9% in the said period.

Next comes Ecolab Inc. (NYSE:ECL) , a leading provider of water, hygiene and energy technologies and services. The company has already anticipated an unfavorable impact of 5 cents per share with respect to adjusted earnings projection for first-quarter 2020.

Over the past two weeks, its shares have underperformed the S&P 500 Index. The stock has declined 9.2% compared with the index’s fall of 7.9%. The company carries a Zacks Rank of 3 (Hold).

Now comes Becton, Dickinson and Company (NYSE:BDX) , which mentioned on first-quarter fiscal 2020 earnings call that it expects to witness a headwind of $20-$30 million in fiscal 2020. From a supply chain perspective, the Zacks Rank #4 (Sell) company currently has sufficient inventory of the products that it exports from China to meet current demand levels. However, considering the rapid spread of the virus, we remain skeptical about the time till which it can operate with the current inventory.

Over the past two weeks, the company’s shares have been on par with the S&P 500 Index.

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