Buy Peloton if Coronavirus Outbreak Worsens, Apple if It Eases: Needham

Peloton would benefit from people exercising at home, while Apple would benefit if supply chains stabilize, Needham analysts said.
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Needham analysts published a list of which stocks to buy if the coronavirus outbreak worsens and which to buy if it eases.

The winners in a worsening include subscription exercise company Peloton Interactive  (PTON) - Get Report and semiconductor-equipment maker Applied Materials  (AMAT) - Get Report.

The recommendations for an easing coronavirus environment include Apple  (AAPL) - Get Report and medical-equipment maker Thermo Fisher Scientific  (TMO) - Get Report.

Regarding Peloton, if the coronavirus situation worsens, “consumers perceive gym visits as increasingly risky over time, especially as they are fitness-focused,” Needham analyst Laura Martin wrote.

“However, these consumers want to stay in shape. PTON bikes allow you to retain the social aspects of fitness by connecting to a community of fitness enthusiasts via live-streamed classes plus a deep library of past classes.”

At last check in a market rout, Peloton shares traded at $23.84, down 4.6%.

On Applied Materials, the Santa Clara, Calif., chip-equipment giant, “Compared to its closest peers, AMAT is more exposed to foundry/logic capital expenditure that is likely to prove more stable than memory,” wrote Needham’s Quinn Bolton.

“Top foundry/logic customers of AMAT, including Taiwan Semiconductor  (TSM) - Get Report, Samsung  (SSNLF) , Intel  (INTC) - Get Report and China-based foundries, are unlikely to slow down their strategic investments this year.”

At last check Applied Materials’ stock traded at $53.98, down 6.6%.

When it comes to Apple in an easing coronavirus environment, Martin said the Cupertino, Calfi., tech company has suffered from its forecast of weaker earnings resulting from the virus.

“Stabilization of Covid-19 would allow product supplies to return to normal, which would reduce product outages,” she said. “And ... pent-up global consumer demand would result in over-delivery of earnings-per-share estimates during the second half of 2020.”

At last check, Apple shares traded at $274.48, down 5%.

As for Thermo Fisher, the Waltham, Mass., provider of analytical instruments and diagnostics, it would benefit from the “diversification benefits [of the] company’s extensive product portfolio and broad commercial reach within multiple end markets and geographies,” wrote Needham’s Steve Unger.

About half of TMO’s revenue is generated from the U.S., "which has not experienced meaningful business disruption from the outbreak.”

At last check, Thermo Fisher’s stock traded at $291.73, down 6.3%.