JB Hi-Fi Limited (ASX:JBH) and 2 other strong ASX growth shares have fallen 8% since news of a COVID-19 vaccine. Let’s take a look.
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The ASX market has been on a high since news of an imminent vaccine for COVID-19 broke out. Before today’s retreat of 0.5% , the ASX 200 index has been on a consecutive day winning streak as investor confidence begins to seep back into the markets.
However, not all companies have had positive price reactions to the vaccine news. Here we’ll take a look at three ASX growth shares that slid following the vaccine news.
Domino’s Pizza Enterprises Ltd (ASX: DMP)
Domino’s Pizza share price had gained more than 60% on a year-to-date (YTD) basis shortly prior to the vaccine news. It has lost 8% of that gain since news of the vaccine was released on Monday, and is currently trading at $78.20.
The company has been a big beneficiary of the lockdown, as more people dine at home and order food deliveries. Its strong results in 2020 was underpinned by the strong demand on its food delivery network. Traditionally, more than 50% of Domino’s global sales come from digital channels and deliveries. As lockdown restrictions are gradually being lifted and restaurants resume business, this source of revenue for Domino’s is perceived to be gradually weakening.
Even before the vaccine news, brokers had already downgraded its outlook on Domino’s after its first quarter results came out only slightly better than expected.
JB Hi-Fi Limited (ASX:JBH)
JB Hi-Fi is a discount retailer of consumer electronics. Its share price had gained 30% leading up to the vaccine news, and has lost 8% since the news hit the markets, and is currently trading at $45.24.
JB Hi-Fi’s business did really well in the past six months as more people were buying home entertainment products as a result of lockdown restrictions. Soon after the vaccine news came out, equity analysts at Macquarie Group Ltd (ASX: MQG) downgraded the company’s shares to a neutral rating and cut the price target on them by almost 10% to $49.50.
Brokers in general have reduced the multiples for shares that it believes are likely to be impacted by a redirection in spending as the world returns to normal.
Fisher & Paykel Healthcare Corp Ltd (ASX: FPH)
Fisher & Paykel is a manufacturer of devices used in respiratory care, acute care, and the treatment of obstructive sleep apnea. Its share price was travelling well this year, gaining more than 60% just before the vaccine news. In the last four trading days, it has fallen by 8%, and is currently trading at $31.05.
There has been strong demand for the company’s hospital respiratory care products in the last six months due to the ongoing spread of the coronavirus pandemic around the world, especially in the northern hemisphere. Investors have been reassessing the future demand for Fisher & Pykel’s products, especially its respiratory devices post-COVID.
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Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia has recommended Domino’s Pizza Enterprises Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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