A number of retail stocks could be exposed to the fallout from the Houthi attacks on cargo ships in the Red Sea, say analysts. Investor anxiety is “brewing” over ocean shipping rates, according to Wells Fargo. “Concerns around freight costs are rising as Red Sea instability bleeds into the broader shipping complex,” wrote Wells Fargo analyst Edward Kelly, in a note released Friday. “While the situation is fluid, we currently expect a small impact for most, with freight still a tailwind in ’24 overall.”
However, Wells Fargo sees Dollar Tree Inc.
DLTR,
+0.79%
as most at risk from Red Sea disruption. “Exposure varies across our coverage, but names with high unit velocity (dollar stores) and high discretionary mix (ocean imports) are most at risk,” wrote Kelly. “This places DLTR in the cross-hairs of another key industry issue.” Related: UPS ‘a good value proposition’ for shippers amid Red Sea attacks, says T.D. Cowen But the potential impact on Dollar Tree is “still digestible”, according to the analyst, who notes that many retailers expected a freight benefit in 2024, as favorable contracts in 2023 wrap into the first half of the year. “We estimate this issue could dampen this benefit, but estimate the EPS impact at 1% or less for all except DLTR.” Wells Fargo estimates that the events in the Red Sea could impact Dollar Tree’s earnings in 2024 by 15 to 25 cents a share. “That being said, this probably just means a portion of the expected $1/sh+ …
Article Attribution | Read More at Article Source
However, Wells Fargo sees Dollar Tree Inc.
DLTR,
+0.79%
as most at risk from Red Sea disruption. “Exposure varies across our coverage, but names with high unit velocity (dollar stores) and high discretionary mix (ocean imports) are most at risk,” wrote Kelly. “This places DLTR in the cross-hairs of another key industry issue.” Related: UPS ‘a good value proposition’ for shippers amid Red Sea attacks, says T.D. Cowen But the potential impact on Dollar Tree is “still digestible”, according to the analyst, who notes that many retailers expected a freight benefit in 2024, as favorable contracts in 2023 wrap into the first half of the year. “We estimate this issue could dampen this benefit, but estimate the EPS impact at 1% or less for all except DLTR.” Wells Fargo estimates that the events in the Red Sea could impact Dollar Tree’s earnings in 2024 by 15 to 25 cents a share. “That being said, this probably just means a portion of the expected $1/sh+ …nnDiscussion:nn” ai_name=”RocketNews AI: ” start_sentence=”Can I tell you more about this article?” text_input_placeholder=”Type ‘Yes'”]