With the increase in daily covid cases, several companies in their earning reports meetings have started to discuss the deadly and highly contagious Delta Variant of the Coronavirus. Before 27 July, only 15% of mentions of the Delta variant by name were made after the CDC changed its mask guidelines for people who have been fully vaccinated.
Some companies provided more conservative forecasts as to whether there would be a material impact on their business in case the situation worsens, but most of them had a positive outlook.
A few companies raised questions about the Delta variant of covid in mid-July when earning release season kicked off.
This has changed since as the number of Covid cases increased and the Centers for Disease Control and Prevention made a U-turn on its stance on masks for people who have been vaccinated, according to an analysis made by CNBC on earnings call transcripts.
Companies Growing More Cautious About Delta Variant
142 companies out of 410 in the S&P 500 between July 13 and Thursday, in their quarterly earnings report, have mentioned the delta variant by name or have replied to questions directed their way. Only 15% of those mentions came before July 27 which was the same day that the CDC said that even people who have been fully vaccinated should wear masks indoors in areas where the rates of transmission are high.
The number of new Covid cases was also surging as the highly transmissible Delta strain became the dominant variant in the country.
The United States is reporting an average of more than 109,000 new cases over a 7 day period as of August 5. This is an increase of almost 28% in a week according to data from Johns Hopkins University.
A majority of executives of companies said that their companies have not had any substantial impact on their business due to the surge in cases.
A medical technology company, Becton, Dickinson & Co, was one of the only few companies that said that there was a change in the behavior of consumers. This suggests to analysts that some states in the country are seeing fewer elective surgeries due to the delta variant in recent weeks.
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As per data from John Hopkins, 72% of the ICU beds in the company were occupied by August 1. Companies that had a global presence said that the scene outside of the US is not the same and is a different story.
The CEO of Apple, Tim Cook said that an uneven recovery to the pandemic and the surge in Delta variant in multiple countries around the globe has shown them that the path to recovery is a tricky one.
The parent company of Kaya and OpenTable, BookingHoldings, said that the bookings it received in July shrank by 22% when compared to 2019. This is a larger decline than the fall in June which was 13%.
The CFO David Goulden said on the company’s call on Wednesday that inspecting within Europe, they saw a fall in the booking of rooms for the night across key countries they operate in which included Germany, France, and Italy.
Other companies said that there were disruptions of the supply chain as the number of Covid cases increased in Asia and Europe. Railway operator Norfolk Souther said that the Delta variant is affecting suppliers located in Southeast Asia.
The CFO of Norfolk said that they have a few plants that outsource parts from South East Asia and that due to the delta variant affecting those areas, their production has been taking a hit and the situation might worsen soon enough. He added on the company’s earnings call that this has had an impact on their production and volumes at present.