Diamonds and Dogs

8/7/19

CVS Health Corp (CVS) in better shape. CVS is jumping 6% following better than expected earnings as sales jumped 35% to $63.43 billion. CVS game in-line guidance for the third quarter, but then raised guidance for the full year. The boost in sales came from the acquisition of Aetna late last year and a shift in the Easter holiday from the first quarter in 2018 to the second quarter in 2019. The company also benefited from higher brand-name drug prices. Going forward, the Aetna merger should be a catalyst in the future. CVS Health expects significant synergies and hopes to introduce new product offerings that take advantage of its scope of operations as a large pharmacy retailer, PBM, and health insurer.

Disney (DIS) having a tough day. The entertainment giant is down 5% following disappointing earnings. Disney missed by a wide margin on earnings and sales. The miss was driven by lower attendance at domestic theme parks ahead of the opening of the Star Wars theme park. Disney is calling this a transition quarter integrating its massive acquisition of the Twenty-First Century Fox assets and lackluster performance form the movie, Dark Phoenix which came over in the Fox deal. Television revenue was up 21% year over year, but operating income grew by just 7%, with margins down due to decreases in ABC Studios' programming sale and network advertising revenue. Disney is bundling its content similar to Netflix offering ESPN+, Disney+ and an ad-supported Hulu bundle for $12.99/month.