Trading Nation

Coronavirus slams travel stocks, and traders warn one name is most vulnerable

Share
VIDEO2:3202:32
How to trade travel stocks amid the coronavirus outbreak

Coronavirus fears hit travel stocks again on Wednesday.

One stock looks most vulnerable to more downside after reporting earnings -- Marriott, the world's largest hotel operator -- according to two market watchers. 

Boris Schlossberg, managing director of FX strategy at BK Asset Management, says Marriott looks more vulnerable than Booking here.

Marriott "has a 15% to 20% exposure to Asia, it could be more impacted," Schlossberg said on CNBC's "Trading Nation" on Wednesday before its earnings release. "When you have a lot of empty hotel rooms, there [are] just fixed costs that you can't give away."

Marriott has been hard hit on the expectation travel restrictions in Asia and consumer wariness around travel would hurt overall revenue. It has declined nearly 20% so far this year.

"It's not a situation where you really want to be long ... unless you are going to be a very long-term investor," he said. 

Craig Johnson, chief market technician at Piper Sandler, agrees that Marriott's position looks tenuous.

"If you look at that chart of Marriott, we're right back at a very key inflection point. We're retesting the uptrend support line off of those 2016 lows. Failure to hold that leaves support at $118. Failure to hold [$118] leaves support at $100," said Johnson during the same segment.

Marriott was trading at $121.53 on Wednesday afternoon. A decline to $100 implies 18% downside.

"At this point in time, that guidance is going to be really critical. And I wouldn't want to try to get long the stock ahead of this earnings print," said Johnson.

Marriott was slightly higher in extended trading Wednesday after topping fourth-quarter earnings estimates. However, it missed on revenue.

Disclaimer