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U.S. Companies Fluctuate on Wall Street as Covid-19 Hits Their 2020 Forecasts

By Bloomberg / Feb 25, 2020 12:52 PM / World

Photo: VCG

Photo: VCG

A growing number of U.S companies are revising their forecasts for 2020 as they factor in both the short- and long-term impact of the Covid-19 outbreak.

Mastercard lowered its 3-week-old forecast for quarterly revenue growth as the spreading coronavirus curbs international travel and even takes a bite out of e-commerce, a business executives had hoped would be immune.

The credit-card network said it’s knocking 2 to 3 percentage points off the revenue prediction it made on an earnings conference call Jan. 29. That translates to growth of 9% to 10% on a currency-neutral basis, excluding acquisitions, it said Monday. Shares of Mastercard and Visa dropped in after-hours trading.

“Cross-border travel, and to a lesser extent cross-border e-commerce growth, is being impacted,” Mastercard said in a statement. “There are many unknowns as to the duration and severity of the situation and we are closely monitoring it.”

The short-lived forecast underscores how quickly the virus is altering consumer behavior as it moves beyond China. Mastercard executives had previously taken comfort in the fact that much of the firm’s business into and out of China is e-commerce, which could potentially continue amid measures to contain the disease.

United Airlines also withdrew its 2020 profit forecast, citing the financial impact of the coronavirus outbreak in China.

The uncertainty surrounding the virus means United can’t guarantee its earlier goal of earning $11 to $13 a share this year, according to a regulatory filing Monday. The earnings target is still within reach if the outbreak runs its course by mid-May and travel patterns return to normal in the five months after that, United said.

At the same time U.S, based biopharmaceutical company Gilead Sciences saw its shares gain on Monday after a senior World Health Organization official said the company’s experimental drug may be the best bet to find a treatment for the new coronavirus spreading around the globe.

Gilead’s compound, remdesivir, has been rushed into a clinical trial in China, where the illness has infected tens of thousands of people. WHO officials have said results could be available within weeks.

Gilead shares rose 4.6% to $72.90 on Monday, the highest closing level since October 2018. Spokeswoman Sonia Choi said Gilead is anticipating results from two trials in China in April.

Related: Coronavirus Epidemic to Deepen Slump in Global Trade, WTO Says

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