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Commentary

The Week Ahead: Disney, CVS, and Bristol-Myers Squibb to Report Earnings

Earnings season is beginning to slow, but we're watching for results on how the pandemic is affecting these names.

May will begin with earnings reports from Walt Disney (DIS) on Tuesday, CVS Health (CVS) on Wednesday, and Bristol-Myers Squibb (BMY) on Thursday.  

The coronavirus has become a catalyst for the evolution of the media industry. Walt Disney is one of the many entertainment firms transforming to the beat of the pandemic's drum. Disney+, along with the unique content on ESPN, the firm's 24-hour crown jewel, and the Disney Channel, provides Disney with a cushion during the crisis. Although its iconic theme parks and resorts have temporarily closed, this wide-moat firm profits from the highest affiliate fees per subscriber of any cable channel and generates revenue from advertisers interested in reaching adult males ages 18-49, a key demographic.  

After spending over a decade to position itself as a leader in the healthcare sector, CVS faces another battle in the industry: the coronavirus. Two major risks are present for the narrow-moat firm and the health services industry. In the most severe scenario, medical costs could rise and push down profits. Secondly, massive layoffs resulting from shelter-in-place orders could lead to a decline in employer-based membership rolls. 

The high need for drugs should support continued demand and supply, leaving Big Pharma and Big Biotech in a steady position during the pandemic. With a strong portfolio of drugs, Bristol-Myers Squibb has built a robust pipeline that promises steady growth potential. We expect medicines and vaccines to emerge, reducing the long-term impact from the coronavirus.  

On Friday, we will be looking out for a report on the unemployment rate. 

Carole Hodorowicz does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.