Coronavirus Brings Temporary Setbacks to Fast Retailing; Fair Value Estimate Lowered to JPY 49,000

We are lowering our earnings and fair value estimate for Fast Retailing to account for the damage the coronavirus has done in Asia and the potential damage it will do to the firm's sales in the United States and Europe. The change in near-term forecasts lead to a 4% and 13% cut in the fiscal 2020 revenue and earnings forecast respectively. Our fair value estimate is slightly reduced to JPY 49,000 from JPY 50,000, based on the expectation of a fast recovery in China. Given its solid balance sheet, we do not expect Fast Retailing to run into liquidity issues. The group's stock has sold off and is currently trading almost 20% below our fair value estimate.