Buy e-commerce stocks as 'fear of public places' accelerates online shopping shift, JPMorgan says

Published Wed, Mar 18 20209:42 AM EDT

(This story is for CNBC Pro subscribers only.) E-commerce companies like Amazon ,are poised to benefit from people's fear of leaving the house thanks to the coronavirus, according to JPMorgan. The Wall Street firm raised its first quarter sales estimates for Amazon, as the online marketplace serves as an important source of food and cleaning supplies as physical stores are closing and people increasingly avoid public spaces. "E-commerce (AMZN, EBAY, CHWY, etc) will benefit as closings of physical stores & fear of public places should accelerate the secular shift of retail online, which we believe will prove sustainable even after the crisis ends," JPMorgan internet analyst Doug Anmuth said in a note to clients on Wednesday. The fast-spreading coronavirus, which has infected more than 200,000 people globally, has kept employees home from work and consumers from leaving their homes in recent weeks. Coresight is estimating more than 15,000 physical stores will shut their doors in 2020. More people are using delivery services for basic items as government encourage "social distancing." Amazon has indicated it has seen a significant increased in demand and is adding 100,000 workers across its fulfillment centers. Shares of Amazon are down about 15% in the past month, while the S & P 500 has cratered more than 25%. "Beyond the near-term benefits, we believe that AMZN will gain incremental share of both total retail & online retail in a downturn, as was the case in 2008-2009," said Anmuth. JPMorgan now expects Amazon's net sales for the first quarter will be around $74 billion, $1 billion more than the high-end of the e-commerce giant's guidance range. Anmuth also likes eBay and pet food delivery service Chewy in the current climate. "We believe CHWY is well-positioned given its high recurring revenue stream, low China supply chain risk, & high exposure to staples-like consumables which represent ~75% of sales (i.e. pet food & treats)," said Anmuth. The firm also said subscription-based businesses, like Netflix, Peloton and Spotify, some of which fall into the stay-at-home bucket, should be at least stable or benefiting from the current environment. "We expect strong demand for NFLX's streaming service throughout the rest of 1H20, especially as the absence of live sports programming lowers the appeal of linear TV and drives more households to cut the cord," Anmuth added. JPMorgan raised it subscriber estimates for Netflix from 26.9 million to 27.8 million global net adds in 2020. JPMorgan has an overweight rating on Amazon and Netflix. — with reporting from CNBC's Michael Bloom.

This illustration picture taken on July 24, 2019 in Paris shows the logo of the US online store application Amazon on the screen of a tablet.

MARTIN BUREAU | AFP | Getty Images

(This story is for CNBC Pro subscribers only.)

E-commerce companies like Amazon,are poised to benefit from people's fear of leaving the house thanks to the coronavirus, according to JPMorgan.