The global shutdown will put a significant dent in corporate earnings this year, according to the latest Analyst Pulse Survey from Fidelity International.
Fidelity’s analysts are bracing for a full year earnings cut of 44%, on average across their companies, if the Covid-19 outbreak dampens economic activity for the whole of 2020. In the event the economy recovers in the second half of the year, that cut is expected to be 27% on average.
Overall, the survey responses reveal that analysts expect the impact of the virus to be felt more broadly and for longer. 91% of analysts now expect a negative impact on earnings from Covid-19, up from 76% last month. Of those 91%, three quarters expect the shutdown to affect earnings negatively for the full year, not just the first six months, up from just over half when surveyed in March.
Fiona O’Neill, deputy head of research, equities, Fidelity International said, “This month, we have seen large changes in our analysts’ forward-looking view on markets compared with the data we collected just four weeks ago.
“This is because the coronavirus has moved from being predominantly an Asia-based crisis to a global pandemic. This has led to complications, even in China where we anticipate first signs of recovery, due to the global interdependence in supply chains.”