These stocks could be winners if Trump devalues the U.S. dollar, according to Jefferies

Jefferies analysts predict a potential 15% dollar devaluation driven by a tacit agreement within U.S.-China trade negotiations, which could benefit U.S. exports and manufacturing. They highlight stocks with significant overseas revenue, foreign competition, and pricing power as potential outperformers, specifically naming Danaher, Nike, and Netflix as beneficiaries. Jefferies has a buy rating on Danaher, Nike, and Netflix, noting their considerable ex-U.S. revenue exposure and potential for increased competitiveness amid a weakening dollar.

Analysis

Jefferies analysts project a significant U.S. dollar devaluation, potentially 15%, driven by a tacit agreement within U.S.-China trade negotiations, a scenario that could mark the currency's first prolonged devaluation in over two decades. This development, following an approximate 7% decline in the dollar year-to-date, is anticipated to enhance U.S. export competitiveness, support domestic manufacturing, and potentially boost Chinese domestic consumption. Consequently, Jefferies identifies U.S. companies with substantial overseas revenue (particularly in China), considerable foreign-domiciled competition, and pricing power as poised to outperform. In the healthcare sector, Danaher (DHR), despite an 18% YTD share price decline, is highlighted with a 'buy' rating and a $230 price target, implying approximately 22% upside from its Monday closing price, supported by its ~55% ex-U.S. revenue exposure. Repligen (RGEN), also with ~55% ex-U.S. revenue, is considered well-positioned but currently holds a 'hold' rating. Within the consumer sector, Nike (NKE) carries a 'buy' rating and a $115 price target, suggesting an 83% upside from its Tuesday close, even after a 17% share price stumble in 2025; Jefferies forecasts 52% of Nike's FY'25 revenue will be international, with 15% from mainland China, and notes potential competitive gains against European peers like Adidas, Puma, and On if the Euro and Swiss Franc appreciate. Netflix (NFLX), also 'buy' rated and up 36% YTD, is expected to benefit from a weaker dollar in achieving its FY25 revenue guidance of $43.5-44.5 billion and improving operating margins. However, Jefferies' $1,200 price target for Netflix is slightly below its recent closing price of $1,211.51, indicating limited further upside based on this specific target.

Key Decisions for Investors

• Investors should assess opportunities in U.S. companies with significant international revenue, particularly exposure to China, and strong pricing power, which are positioned to benefit from a potential U.S. dollar devaluation as forecasted by Jefferies.
• Consider Jefferies' 'buy' ratings on Danaher and Nike, as these companies exhibit substantial overseas sales and could experience significant share price appreciation if the dollar weakens and their respective price targets are achieved, despite recent underperformance.
• For Netflix, while a weaker dollar supports its revenue and margin outlook and it has a 'buy' rating, investors should note that Jefferies' $1,200 price target is below its recent closing price, suggesting a need to evaluate upside potential carefully despite positive currency tailwinds.
• Closely monitor developments in U.S.-China trade negotiations for any signs of a currency agreement, as this would serve as a key catalyst for the dollar devaluation thesis and the performance of export-oriented U.S. equities.