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Here's Why You Should Add DaVita (DVA) to Your Portfolio Now

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DaVita Inc. (DVA - Free Report) is gaining from the Kidney Care segment and overseas growth.

The company, with a market capitalization of $12.13 billion, is a leading provider of dialysis services to the healthcare industry. The company’s earnings are expected to improve 18.3% over the next five years. Also, this Zacks Rank #2 (Buy) company has a trailing four-quarter earnings surprise of 27.3%, on average.

Over the past three months, the stock has gained 24% compared with the industry’s 4% growth.

Let’s delve deeper into the factors working in favor of the company.

DaVita Kidney Care: DaVita Kidney Care, DaVita’s major revenue-generating segment, specializes in a broad array of dialysis services that significantly contribute to the top line.

DaVita Kidney Care focuses on setting worldwide standards for clinical, social and operational practices in kidney care.DaVita Kidney Care also provides support to nephrologist-led organizations like Nephrology Care Alliance in their endeavor to treat patients with chronic kidney disease.

Through the third quarter, the company had been customizing care for patients across the kidney care continuum using proprietary systems that it has been developing for years in partnership with industry leaders. It is starting to see benefits from these tools in the form of AI-driven models that personalize dosing for certain therapeutics, anticipate patients' clinical status and help avoid hospitalization, identify Chronic Kidney Disease stage 4 patients who are likely to progress swiftly to End Stage Renal Disease, as well as help avoid unplanned dialysis starts.

Acquisition of Dialysis Centers: Acquiring dialysis centers and businesses that own and operate dialysis centers, as well as other ancillary services is DaVita’s preferred business strategy. This has helped the company to boost the top line to a large extent.

During third-quarter 2020, DaVita opened a total of 17 new dialysis centers, acquired five dialysis centers and closed eight dialysis centers in the United States. It also acquired 11 dialysis centers and opened one dialysis center outside the United States.


Overseas Growth: DaVita is steadily expanding in international markets. In the past few years, the company has strengthened its position in the emerging and developing markets of Brazil, China, Colombia, Germany, India, Malaysia, Netherlands, Poland, Portugal, and Saudi Arabia through strategic alliances as well as acquisitions of dialysis centers.

These are expected to help DaVita deliver more efficient patient care. Currently, DaVita is seeking to expand in major European and Asian countries via acquisitions, as well as partnerships.

Estimates Trend

The company is witnessing a positive estimate revision trend for fiscal 2020 earnings. Over the past 60 days, the Zacks Consensus Estimate for the same has risen to $7.50 per share from $6.89.

The Zacks Consensus Estimate for fourth-quarter fiscal 2020 revenues is pegged at $2.94 billion, suggesting a 1.3% rise from the year-ago reported number.

Other Key Picks

Some other top-ranked stocks from the broader medical space include Align Technology (ALGN - Free Report) , Cardinal Health (CAH - Free Report) and Thermo Fisher Scientific (TMO - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Align Technology has a projected long-term earnings growth rate of 18.3%.

Cardinal Health has a projected long-term earnings growth rate of 5.5%.

Thermo Fisher has an estimated long-term earnings growth rate of 18%.

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