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Here's Why You Should Hold on to DaVita (DVA) Stock Now
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DaVita Inc. (DVA - Free Report) is well-poised for growth on the back of solid international growth and a robust DaVita Kidney Care business. However, integration risks remain a concern.
Shares of this Zacks Rank #3 (Hold) have lost 2.7% on a year-to-date basis compared with the industry’s decline of 15.4%. The S&P 500 Index has fallen 12.4% in the same time frame.
The company — with a market capitalization of $10.60 billion — is a nationwide drug distributor and provider of services to pharmacies, healthcare providers and manufacturers. It anticipates earnings to improve 10.2% over the next five years. The company beat earnings estimates in each of the trailing four quarters, the average surprise being 14.6%.
What’s Driving the Performance?
DaVita is steadily expanding in the 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.
During the fourth quarter of 2021, DaVita’s revenues from international dialysis patient service and other, which is included in the company’s ancillary services, improved 11.8%. The company’s international operations provided dialysis and administrative services to a total of 339 outpatient dialysis centers located in 10 countries other than the United States, serving approximately 39,900 patients. DaVita’s international dialysis operations have continued to grow steadily and expand on the back of acquiring and developing outpatient dialysis centers in various strategic markets.
Image Source: Zacks Investment Research
DaVita Kidney Care, the major revenue-generating segment of DaVita, specializes in a broad array of dialysis services, thereby significantly contributing to the company's top line. As an operating division of DaVita, DaVita Kidney Care focuses on setting worldwide standards for clinical, social and operational practices in kidney care. DaVita saw solid results from the Kidney Care business. DaVita’s dialysis patient service revenues rose 2.5% year over year during the fourth quarter of 2021. Total U.S. dialysis treatments for the fourth quarter were 7,455,560 or 94,374 per day, on average.
With respect to DaVita Integrated Kidney Care (DaVita IKC), the company had approximately 16,000 patients in risk-based integrated care arrangements representing approximately $1.8 billion in annualized medical spending as of Dec 31, 2021. DaVita had an additional 7,000 patients in other integrated care arrangements.
What’s Weighing on the Stock?
DaVita’s business strategy includes growth through acquisitions of dialysis centers and other businesses, as well as entry into joint ventures. The company may engage in acquisitions, mergers, joint ventures or dispositions or expand into new business models, which may affect its results of operations, debt-to-capital ratio, capital expenditures or other aspects of the business.
Estimates Trend
For 2022, the Zacks Consensus Estimate for revenues is pegged at $11.87 billion, indicating an improvement of 2.2% from the previous year’s reported number.
The same for adjusted earnings per share stands at $8.09, suggesting a decline of 11.4% from the year-ago reported figure.
Stocks to Consider
Some better-ranked stocks from the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , Henry Schein, Inc. (HSIC - Free Report) and McKesson Corporation (MCK - Free Report) .
AMN Healthcare surpassed earnings estimates in each of the trailing four quarters, the average surprise being 20%. The company currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AMN Healthcare’s long-term earnings growth rate is estimated at 16.2%. AMN’s earnings yield of 8.8% compares favorably with the industry’s 0.3%.
Henry Schein beat earnings estimates in each of the trailing four quarters, the average surprise being 25.5%. The company currently sports a Zacks Rank #2 (Buy).
Henry Schein’s long-term earnings growth rate is estimated at 11.8%. HSIC’s earnings yield of 5.6% compares favorably with the industry’s 4.1%.
McKesson surpassed earnings estimates in each of the trailing four quarters, the average surprise being 20.6%. The company currently carries a Zacks Rank #2.
McKesson’s long-term earnings growth rate is estimated at 11.8%. MCK’s earnings yield of 8.8% compares favorably with the industry’s 4.1%.
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Here's Why You Should Hold on to DaVita (DVA) Stock Now
DaVita Inc. (DVA - Free Report) is well-poised for growth on the back of solid international growth and a robust DaVita Kidney Care business. However, integration risks remain a concern.
Shares of this Zacks Rank #3 (Hold) have lost 2.7% on a year-to-date basis compared with the industry’s decline of 15.4%. The S&P 500 Index has fallen 12.4% in the same time frame.
The company — with a market capitalization of $10.60 billion — is a nationwide drug distributor and provider of services to pharmacies, healthcare providers and manufacturers. It anticipates earnings to improve 10.2% over the next five years. The company beat earnings estimates in each of the trailing four quarters, the average surprise being 14.6%.
What’s Driving the Performance?
DaVita is steadily expanding in the 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.
During the fourth quarter of 2021, DaVita’s revenues from international dialysis patient service and other, which is included in the company’s ancillary services, improved 11.8%. The company’s international operations provided dialysis and administrative services to a total of 339 outpatient dialysis centers located in 10 countries other than the United States, serving approximately 39,900 patients. DaVita’s international dialysis operations have continued to grow steadily and expand on the back of acquiring and developing outpatient dialysis centers in various strategic markets.
Image Source: Zacks Investment Research
DaVita Kidney Care, the major revenue-generating segment of DaVita, specializes in a broad array of dialysis services, thereby significantly contributing to the company's top line. As an operating division of DaVita, DaVita Kidney Care focuses on setting worldwide standards for clinical, social and operational practices in kidney care. DaVita saw solid results from the Kidney Care business.
DaVita’s dialysis patient service revenues rose 2.5% year over year during the fourth quarter of 2021. Total U.S. dialysis treatments for the fourth quarter were 7,455,560 or 94,374 per day, on average.
With respect to DaVita Integrated Kidney Care (DaVita IKC), the company had approximately 16,000 patients in risk-based integrated care arrangements representing approximately $1.8 billion in annualized medical spending as of Dec 31, 2021. DaVita had an additional 7,000 patients in other integrated care arrangements.
What’s Weighing on the Stock?
DaVita’s business strategy includes growth through acquisitions of dialysis centers and other businesses, as well as entry into joint ventures. The company may engage in acquisitions, mergers, joint ventures or dispositions or expand into new business models, which may affect its results of operations, debt-to-capital ratio, capital expenditures or other aspects of the business.
Estimates Trend
For 2022, the Zacks Consensus Estimate for revenues is pegged at $11.87 billion, indicating an improvement of 2.2% from the previous year’s reported number.
The same for adjusted earnings per share stands at $8.09, suggesting a decline of 11.4% from the year-ago reported figure.
Stocks to Consider
Some better-ranked stocks from the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , Henry Schein, Inc. (HSIC - Free Report) and McKesson Corporation (MCK - Free Report) .
AMN Healthcare surpassed earnings estimates in each of the trailing four quarters, the average surprise being 20%. The company currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AMN Healthcare’s long-term earnings growth rate is estimated at 16.2%. AMN’s earnings yield of 8.8% compares favorably with the industry’s 0.3%.
Henry Schein beat earnings estimates in each of the trailing four quarters, the average surprise being 25.5%. The company currently sports a Zacks Rank #2 (Buy).
Henry Schein’s long-term earnings growth rate is estimated at 11.8%. HSIC’s earnings yield of 5.6% compares favorably with the industry’s 4.1%.
McKesson surpassed earnings estimates in each of the trailing four quarters, the average surprise being 20.6%. The company currently carries a Zacks Rank #2.
McKesson’s long-term earnings growth rate is estimated at 11.8%. MCK’s earnings yield of 8.8% compares favorably with the industry’s 4.1%.