Managing 2021 Expectations


As we eclipse the one-year anniversary of the start of the COVID-19 pandemic, 2021 is filled with hope and optimism, and yes, plenty of uncertainty in the macroenvironment. While markets have priced in an economic recovery with GDP expected to return to pre-pandemic levels by the middle of 2021[1], payroll employment and consumer confidence remain far below where they stood this time last year. Coupled with inflationary fears brought on by the recent $1.9 trillion relief package, rising interest rates on the horizon, and a bumpy vaccine rollout to date, the world remains far from (pre-pandemic) normal.

As we move into the first quarter reporting cycle, investors and analysts will undoubtedly press management teams on their views regarding the pace, timing, and magnitude of the recovery within their respective industries and how that will impact future operations and performance of their companies. This can be challenging in a normal environment. Add in significant uncertainties related to macroeconomic factors largely outside of management’s control, and the task is particularly difficult, if not impossible.

Recognizing the impact of and the recovery from the pandemic thus far has been highly varied, we examine key trends and issues across the major industries and what companies can expect to face as we move further into 2021.


2021 will likely be another challenging year as the aviation industry tries to rebound from a historically disastrous 2020 and address the lingering issues that the pandemic still poses to the industry. Short-term hurdles include convincing the public that flying is safe, lifting travel restrictions, gaining clarity and consistency in health and travel advisories, and implementing uniform testing or vaccination protocols.

Mid- to longer-term issues include increased scrutiny on airlines that received government funds, heightened focus on airlines meeting certain environmental, social and governance (ESG) standards, as well as to perform routine safety inspections, in light of past issues surrounding the Boeing 737 Max and Pratt and Whitney engines.

The combination of these factors creates a highly uncertain environment for 2021 with the International Air Transport Association (IATA) projecting 2021 travel volumes only reaching 33% to 38% of 2019 levels depending on the vaccine rollout as well as the return of leisure and business travel. Given performance year-to-date, FTI’s industry experts believe North American travel volume will lean towards the upper end of IATA’s range with Europe and Asia hitting the middle and lower end of the range, respectively, this year.

Consumer & Retail

2020 profoundly affected consumer habits and accelerated existing trends like omni-channel and buy-online-pick-up-in-store (BOPIS), which clearly delineated the COVID-19 winners (online retailers, online entertainment companies, consumer staples) from the losers. 2020 represented a record year of Chapter 11 filings for companies that were unable to adapt to the pandemic environment, including department stores, apparel retailers, leisure companies, as well as restaurant groups. In 2021, investors are focused on the ability of COVID-19 beneficiaries to retain market share gains as we move into a post-pandemic environment and whether positive 2020 trends will continue to hold.

Key hurdles this year include the stickiness of consumer habits independent of the economic recovery, geographic exposure as recovery efforts vary greatly across the globe, ramp up of operations to pre-pandemic levels, supply chain agility to meet demand trends and mitigation of cost inflation as companies continue to face pressure on margins.

While stimulus checks and vaccinations have helped boost U.S. consumer sentiment, ongoing pandemic-related concerns continue to prevail. FTI’s industry experts expect e-commerce to continue to outperform, in-home consumption to likely remain strong for quite some time and discretionary subsectors to benefit from a spending rebound driven by pent-up demand as well as increased social activities.


After several years of dramatic underperformance relative to the broader market, the energy sector is finally beginning to attract renewed interest from institutional investors in 2021. While this can be attributed to a recovery in global oil and gas prices from pandemic lows, there are other more nuanced and salient factors at play.

The bedrock of the energy sector’s recovery has, and will likely continue to be, better capital discipline. Successful companies have focused on sustaining free cash flow generation, strengthening their balance sheets, and returning capital to shareholders. That formula, along with the dollar-driven rally in commodities, is beginning to take hold.

The pandemic also accelerated the realignment of operations and strategy with ESG best practices. This will likely continue to reshape the global energy landscape in 2021 and beyond. NOCs and IOCs can no longer be just “oil companies.” They are reinventing their respective business plans and portfolios by reallocating capital to renewables and identifying their role in the energy transition. In the services arena, the global market leaders are pivoting quickly to incubate new technologies that will accelerate the decarbonization of the transportation, power, and downstream industries.

Navigating the energy transition will present its share of challenges. Winners and losers will certainly emerge from the electrification of the auto market, rapid strategic pivots away from cash generative “dirty” energy assets, and the recent Carbon Neutral SPAC frenzy. FTI’s industry experts believe that articulating the right balance between decarbonization and prudent capital management will be a prerequisite to success.

Financial Services

The pandemic has rapidly accelerated the pace at which people interact with financial services, which in turn has increased the speed at which these firms are embracing technology. Whether the subsector is banking, payments, insurance, trading, or asset management, a consistent theme has emerged via technology-enabled solutions.  Fintech firms are increasingly looking to access capital markets at earlier stages in their lifecycles, through both IPOs and SPACs.

The recent surge in retail trading has cast a spotlight on integrity of our capital markets infrastructure – ranging from exchanges to payment for order flow and retail brokerages.  Broad interest in crypto and blockchain is picking up speed – with major asset managers approving exposure through select mutual funds, and payment networks announcing support of select cryptocurrencies on their networks.

Regulatory pressure to incorporate ESG considerations and climate change into stress testing will continue to weigh on both banks and insurers. Moreover, reported losses and systematic vulnerabilities from the $30 billion Archegos selloff will increase scrutiny on derivatives, disclosures, and prime broker relationships.

FTI’s experts believe that navigating these unprecedented times in financial services requires a careful balance and understanding of business dynamics, capital markets, regulation, and policy.

Healthcare & Life Sciences

The healthcare & life sciences industry, which prior to the pandemic faced reputational challenges driven by pricing, regulatory, and political issues, was given a unique opportunity to make amends in 2020. This was predominantly driven by the industry’s critical role in keeping the world’s population safe – from hospitals, to testing and laboratory facilities, to telehealth, to ultimately, vaccines that were developed and produced in record time.  Throughout it all, we witnessed impressive collaboration, flexibility and innovation across the healthcare space. A unified approach between the private and public sector enabled record approval and dissemination of diagnostics, treatments, and vaccines. Looking at operational performance, companies’ resiliency was put to the test as they were forced to navigate mass clinical trial delays, a pause in elective surgeries, and historically low utilization rates for payors.

With companies looking to normalize business moving forward, uncertainty remains around the potential positive and negative financial implications of COVID-19. So far, management guidance in 2021 implies very different views comparing the first to second half of the year, as many companies attempt to reconcile long-term needs of COVID-19 solutions and the reopening of the economy.

As we move further into the year, organizations have been forced to rapidly adapt and make critical business decisions to manage the uncertainty around further coronavirus disruptions, economic and political shifts, and regulatory uncertainty.  FTI’s industry experts highlight a handful of trends that will be prominent in shaping the opportunities for the healthcare space in the year ahead, including health reform debate, the revival of drug price scrutiny, the digital health revolution, a rebound in M&A deal activity, and an increased focus on ESG for the sector.


2021, much like 2020, will also be a tail of two cities with significant differences between the first and second halves of the year. Industrials companies will likely benefit from easy comparisons during the first six months of 2021 as COVID-19 largely shut down the global economy through the first half of 2020. However, as COVID-19 related restrictions were relaxed and economic activity improved, the back half of 2020 was stronger than expected, which may present difficult comparisons for many industrial companies this year.

A key hurdle for the industry is the significant inflationary pressure driven by the combination of global supply chain constraints, robust stimulus packages and a slow re-opening of the global economy. Companies are already experiencing significant increases in raw material costs, such as crude, polypropylene, ethylene, wood, steel and copper while prices of commodities such as wheat, corn and soy have been on the rise. In addition, companies are facing higher logistics and transportation costs, as well as labor costs.

The focus will be on how companies successfully mitigate these pressures, though near-term margins will likely be impacted. Sub-sectors such as auto, transportation, commercial aero, residential construction, electrical equipment, and pump and valve manufacturers, among others, will be forced to find ways to offset this inflationary pressure through a combination of cost cutting, restructuring and price increases.

FTI’s industry experts believe significant pent up global demand and strong underlying economic growth coupled with stimulus will result in a favorable backdrop for industrial companies despite the expected difficult year-over-year comparisons in the second half of 2021.

Technology, Media & Telecommunications

During 2020, we witnessed dramatic shifts in how individuals worked, shopped, learned, and entertained themselves due to the pandemic. Digital adoption accelerated meaningfully throughout 2020, by some estimates several years’ worth of adoption was packed into a few months’ time out of sheer necessity. The technology, media, and telecommunications providers that enabled these changes were among the biggest beneficiaries of this surging demand in 2020.

In 2021, a key question will be whether the changes and behavioral shifts that defined 2020 will hold as we move into a post-pandemic environment. FTI’s industry experts believe that as the broader economy re-opens, we may see some behaviors revert to pre-pandemic norms, but many of the changes seen in 2020 will be durable. Digital adoption will continue to rise and this means that digital transformation at the corporate level will also accelerate as companies look to improve their offerings, adapt to a new normal and seek to become more nimble and responsive to a changes across their end markets and customer bases. This augers well for enterprise technology companies whose products and services help companies with this transition. This applies to a broad swath of companies across tech hardware, software, infrastructure and digital-focused companies across the TMT industry as well as data analytics providers and AI companies.

TMT is a broad sector and while 2021 may be a difficult year for year to year growth comparisons for many companies, one thing is for sure: we are a much more digital world than we were a year ago and it’s unlikely we’ll ever completely revert back.

Thoughts on Guidance

Across industries, many companies cut outlook during the COVID-19 pandemic last year. Approximately 52% of the 285 S&P 500 companies that historically provided annual EPS guidance suspended FY2020 guidance and indicated they would not provide estimates for FY2021 either[2]. This aligns closely with the Dow Jones Industrial Average, where 10 of the 21 companies that gave financial guidance at the beginning of 2020 withdrew guidance[3]. At the sector level, industrials and consumer discretionary companies were most likely to cut guidance in fiscal 2020 and have been slowest to resume a formal outlook, while sector beneficiaries of the pandemic such as healthcare and information technology largely remained consistent in their practices and were most likely to provide formal guidance throughout this time.

As companies contemplate a return to formal guidance in 2021, it will be important to manage investor expectations by caveating how performance will be impacted by COVID-19 dynamics and specific industry trends. Many companies have noted an expected variance between 1H and 2H 2021 performance and highlight the choppy environment to provide leeway and manage expectations. When visibility remains limited, a larger than usual guidance range may be required and is preferable than no guidance at all. An important consideration is to caveat bull and bear scenarios and the factors at play.

2020 has shown us that companies should shift towards providing investors with expectations around the underlying financial and nonfinancial drivers of the business over longer time periods, particularly around those that are within companies’ control. This can be supplemented with short-term or quarterly guidance when necessary to address seasonality or one-off events. However, focusing on providing and tracking to long-term targets around metrics such as revenue, margins and return on capital along with relevant operating metrics will help companies maintain a steady beat during good times and bad.


Looking out on the remainder of the year, companies will need a balanced message as they navigate the fluid macroenvironment and various industry impacts. As the world recovers from the COVID-19 pandemic, it will be more important than ever to accurately manage investor expectations while preserving management credibility.

During this time of transition, investors will be recalibrating where they invest and will have a variety of pressing questions for you, including, but not limited to:

  • What lessons have you taken away as a result of the pandemic?
  • What steps have you taken to ensure success in a post-pandemic environment?
  • How are the pace of recovery and other industry dynamics impacting your performance?
  • How are you adapting to new trends and fundamental shifts in your industry?
  • What are you doing to position yourself for long-term growth?

Be prepared to answer these tough questions and clearly communicate your message. While the environment continues to rapidly evolve, successful investor relations programs hinge on the ability to accurately convey your expectations for this year, the dynamics at play and how the uncertainties we’re facing may impact your financial outlook, strategic priorities, and operations. Thoughtfully communicating these aspects of your equity story will help protect your credibility while driving the right type of institutional demand in your stock in 2021 and beyond.

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