December 21, 2020  |  U.S. Equity
Industrials Resilient Amid COVID-19

Research Analyst

Yan Krasov, CFA, partner, is a research analyst at William Blair Investment Management. He focuses on U.S. large-cap industrials and healthcare companies. Before joining William Blair in September 2006, Yan spent four years at JPMorgan Securities in Chicago, where he began his career in the firm’s institutional equity sales and private client services groups. He is a member of the CFA Institute and the CFA Society Chicago. In addition, he holds the SASB Fundamentals of Sustainability Accounting (FSA) credential. Yan received a B.S. in speech and economics from Northwestern University and an M.B.A. from the University of Chicago’s Booth School of Business.

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The COVID-19 pandemic has caused sudden and widespread disruption of activity across many sectors previously thought to be economically resilient.

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The COVID-19 pandemic has caused sudden and widespread disruption of activity across many sectors previously thought to be economically resilient.

However, the executives running companies within the industrial sector are used to managing through periods of economic uncertainty and fluctuation and demand for their products and services.

Most industrial businesses have been deemed as essential by governmental authorities, and thus have continued to operate through the pandemic—albeit at lower workforce levels due to precautionary safety measures and reduced external demand.

There are likely to be differences in the timing and the magnitude of recovery by company and by industry.

A significant number of industrial companies have actively participated in the response to the pandemic by shifting their manufacturing processes to produce ventilators, face masks, and other medical equipment.

While the impact of the recession has been severe and widespread across the industrial sector, there are likely to be differences in the timing and the magnitude of recovery by company and by industry.

For companies whose revenue generation is dependent upon long-timed large capital investment decisions by their customers, the path to recovery is likely to be longer.

Further complicating normalization for a lot of these companies is the potential to shift at least a portion of business activity to the work-from-home environment on a more permanent basis.

Companies that have chosen to focus on sustaining their investment plans could be in better position to generate faster growth.

In contrast, companies whose revenue generation comes primarily from services or manufacturing activity closely related to ongoing consumer spending, the recovery is likely to be faster and likely to approach revenue projections made prior to the pandemic.

A further differentiating factor over the long term is likely to be between companies that have chosen to preserve long-term investment in new products, services, and geographic expansion, as well as preserving wages and benefits for their workforce versus those who have chosen to cut long-term investment to preserve short-term earnings.

Companies that have chosen to focus on sustaining their investment plans could be in better position to generate faster growth over a longer period of time coming out of the pandemic.

Yan Krasov, CFA, partner, is a research analyst on William Blair’s U.S. Growth Equity team.

 

Research Analyst

Yan Krasov, CFA, partner, is a research analyst at William Blair Investment Management. He focuses on U.S. large-cap industrials and healthcare companies. Before joining William Blair in September 2006, Yan spent four years at JPMorgan Securities in Chicago, where he began his career in the firm’s institutional equity sales and private client services groups. He is a member of the CFA Institute and the CFA Society Chicago. In addition, he holds the SASB Fundamentals of Sustainability Accounting (FSA) credential. Yan received a B.S. in speech and economics from Northwestern University and an M.B.A. from the University of Chicago’s Booth School of Business.

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