The Dow Jones Industrial Average (^DJI 0.01%) opened lower on Monday as a busy week of earnings reports began. Contributing to the decline was a precipitous drop in crude oil prices, driven by a combination of excess supply and depressed demand. The Dow was down 0.85% at 11:25 a.m. EDT today.

While talk of reopening the U.S. economy helped boost the stock market last week, the coronavirus is far from contained. There are now over 760,000 cases in the U.S., according to Johns Hopkins University, and more than 40,000 Americans have died from COVID-19. Daily new cases appear to be leveling off, but the U.S. is still adding around 30,000 cases each day.

The pandemic is hitting some businesses harder than others. Disney (DIS 1.09%), dependent on its theme parks and movie releases, was downgraded by two analysts on Monday. International Business Machines (IBM 0.13%) will likely see its results hurt as well, and the extent of the damage will become clearer when the tech giant reports on Monday afternoon.

A Wall Street street sign.

Image source: Getty Images.

Disney downgraded twice

With much of Disney's business hurt by the pandemic, it isn't surprising to see analysts taking a less bullish stance on the stock. On Monday, analysts at Credit Suisse and UBS reduced their ratings to neutral to reflect the challenges facing the company.

Credit Suisse sees Disney stock potentially hitting $160 within the next few years, given that the company's parks and movie operations are expected to eventually recover. Credit Suisse also expects growth in the streaming business to offset any declines in linear TV. But a severe lack of visibility and depressed earnings this year prompted the downgrade. Credit Suisse now has a price target of $116 on Disney stock.

UBS downgraded Disney for similar reasons. UBS' base case has Disney's parks reopening at the beginning of 2021, and it expects the parks business to be less profitable until a vaccine is widely available. On top of the trouble in the parks business, it is concerned about Disney's heavy exposure to live sports. UBS now has a price target of just $114 on the stock.

Once Disney is able to reopen its parks, it's unclear how eager guests will be to return. The same goes for movie theaters, which are crucial to Disney's studio entertainment business. The company has its Disney+ streaming service, which now has over 50 million subscribers, as an outlet for content. But that can't replace the billions of dollars Disney brings in annually from movie ticket sales.

Disney stock was down 2.5% Monday morning on the double downgrade news. While shares of the entertainment giant have bounced back from their March lows, they remain down 32% from their 52-week high.

IBM to report earnings

IBM will report its first-quarter results after the market closes Monday. With IBM's quarter ending in March, the company's results won't show the full impact of the pandemic. The stock was up about 1.5% in the morning, moving in the opposite direction from the Dow.

Analysts are expecting IBM to report first-quarter revenue of $17.62 billion, according to Yahoo! Finance, down 3.1% year over year. Adjusted earnings per share of $1.79 are expected, down from $2.25 in the prior-year period. The declines will be partly a result of accounting rules surrounding the company's acquisition of Red Hat. IBM can recognize only a portion of Red Hat's revenue, which reduces both total revenue and earnings.

IBM doesn't issue quarterly guidance, but it does provide some targets for the full year. The company currently expects adjusted EPS of at least $13.35 and free cash flow of roughly $12.5 billion for 2020. IBM hasn't yet issued any warning related to the pandemic, but it's possible the company will either cut its guidance or withdraw it completely.

This will be the first quarterly report with new CEO Arvind Krishna at the helm. Krishna took over on April 6, beginning a new chapter for IBM as it aims to grow its hybrid cloud business and turn Red Hat's OpenShift platform into an industry standard. The pandemic has likely thrown a wrench into the works, but Krishna sees IBM emerging from the crisis strong and focused on growth.

IBM is up 35% since bottoming out in March, but shares are still down roughly 23% from their 52-week high.