Seemingly everywhere you turn these days there's bad news about the coronavirus delta variant. Centers for Disease Control and Prevention (CDC) director Rochelle Walensky recently said the delta variant is "one of the most infectious respiratory viruses we know of." The highly contagious strain is the culprit behind increasing COVID-19 cases across the U.S. and much of the world.
But is the news really not as bad as it seems? That could be the case based on the views of several executives who are plugged into what's going on with COVID-19 dynamics. Worries about the delta variant could be overdone based on clues from three healthcare giants.
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Optimism across the board
We're in the middle of corporate earnings season right now. The most important things to pay attention to often aren't the companies' quarterly results but instead what their management teams are saying about the future. So far in this earnings season, there seems to be a similar outlook when it comes to COVID-19 and the delta variant.
Johnson & Johnson (JNJ +0.72%) CFO Joe Wolk said in his company's second-quarter conference call that J&J's base business is expected to "remain strong" throughout this year and is poised for growth in 2022 and beyond. He noted, "We're in a much better position to handle [the] pandemic than we were in March of last year."
Wolk's optimism was shared by J&J worldwide chairman of medical devices Ashley McEvoy. She stated that the company is "encouraged by, quite frankly, several things, the ability that hospitals can manage through capacity and surges and labor, as well as, obviously, the vaccination efforts around the world."
Abbott (ABT 2.07%) CEO Robert Ford was asked about the potential impact of coronavirus variants in his company's Q2 call as well. He replied, "I don't think that you'll see the same -- at least we're not seeing the same kind of impact in terms of hospitals shutting procedures down, stopping testing, etc. I think it's a very different situation where we are this year versus where we are last year."
Like Johnson & Johnson, Intuitive Surgical (ISRG 0.02%) increased its full-year 2021 guidance. Senior vice president of finance Jamie Samath said in the robotic surgical systems leader's Q2 call that this improved outlook assumes that "the vaccines are effective against any new COVID-19 variants and the vaccine rollouts in OUS [outside the U.S.] markets continue as currently expected by governments around the world."
Common caveats
All three of these companies experienced significant negative impacts on parts of their businesses in 2020 due to the pandemic. You can bet that their executives are paying close attention to what's going on with the delta variant. And so far, they don't seem to be worried. However, there were some common caveats to that optimism.
Johnson & Johnson's McEvoy said that the company is "seeing the light at the end of the COVID-19 tunnel." However, she also quickly added that it remains "a very fluid situation."
Abbott CFO Robert Funck acknowledged that "forecasting COVID is quite challenging." He noted that the uncertainties related to variants and vaccination rates were contributing factors to why his company's guidance range for full-year 2021 was relatively wide.
Intuitive Surgical CFO Marshall Mohr echoed the cautious perspective. Mohr said, "To the extent that hospitalizations expand significantly due to COVID and its variants, like currently being experienced in parts of the world, it could negatively impact da Vinci procedures."
Impact for investors
All three of these healthcare stocks will benefit if the concerns about the delta variant are indeed overdone. That's especially the case for Intuitive Surgical. Any delays in surgical procedures involving its da Vinci robotic surgical systems would curtail the company's strong recovery from 2020.
Johnson & Johnson could see higher sales of its COVID-19 vaccine if there's a sustained surge in outbreaks caused by variants. Abbott would probably also generate more revenue from its COVID-19 tests. But both companies would experience headwinds in other areas of their businesses from a worsening pandemic.
If there were serious reasons to worry about how the delta variant might impact the economy, we probably would have heard more negativity from Abbott, Intuitive Surgical, and J&J. That wasn't the case, however. And that could provide a big hint that the stock market could plow forward without a huge impact from the highly contagious variant.
