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TheStreet Open House

3 Big Sectors May Face Post-Sandy Downgrades: Moody's

Already, analysts have handicapped a wide-ranging earnings impact to a range of sectors spanning airlines and retail. Meanwhile, regional insurers may double the claims of Hurricane Irene.

The storm may even prove to be a key earnings test for telecom giants like Verizon (VZ - Get Report), AT&T (T), Sprint (S) and T-Mobile- MetroPCS (PCS).

After Sandy hit, late October analysis by Credit Suisse estimated fourth-quarter Hurricane Sandy-related insurance industry losses between $5 billion and $15 billion, and the bank cut its price targets for Allstate, Arch Capital (ACGL), Chubb (CB) and Travelers (TRV).

On Oct. 31, Goldman Sachs analysts said home-improvement giants like Home Depot (HD - Get Report), Lowe's (LOW), Lumber Liquidators (LL) and Owens Corning (OC) would benefit from Sandy, as homeowners and businesses spend heavily to repair houses, offices and stores.

Within the retail sector, the Goldman analysts, led by Matthew Fassler, also forecast a hit to casinos, restaurants and discount stores, highlighting Boyd Gaming (BYD - Get Report), The Cheesecake Factory (CAKE), Dollar Tree (DLTR), Dunkin' Brands (DNKN), Five Below (FIVE) and Panera Bread (PNRA).

Bank of America Merrill Lynch analysts suggested in late October that for refineries, a loss in demand for energy products may be greater than production shortfalls as some Eastern Seaboard refineries went off line.

Phillips 66 (PSX) and Hess (HES) shuttered large Northeast refineries for storm-related assessments, while regional Philadelphia Energy Solutions refineries remain open. Still, the analysts say Sandy won't help much. Valero (VLO) is the only "buy"-rated refinery, according to BAML.

In the airline sector, Bank of America Merrill Lynch analysts calculate U.S. airlines may have lost $500 million in revenue and $100 million in profits, and highlights JetBlue (JBLU), US Airways (LCC) and Delta (DAL) as carriers most exposed to the Northeast.

To be seen whether Hurricane Sandy's blow will cause Moody's to downgrade already struggling industries and sectors, notably Atlantic City casino's. As ratings agencies and investment banks put out projections of the storm's impact, investors should begin to position for fourth quarter 2012 earnings.

-- Written by Antoine Gara in New York

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