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DaVita (DVA) Hits 52-Week High: What's Driving the Stock?
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Shares of DaVita Inc. (DVA - Free Report) scaled a new 52-week high of $104.72 on Jul 10, before closing the session slightly lower at $103.69.
Over the past year, this Zacks Rank #2 (Buy) stock has gained 22.7% against the 7.1% decline of the industry. The S&P 500 has witnessed 15.2% growth in the said time frame.
Over the past five years, the company registered earnings growth of 12.9% compared with the industry’s 5.9% rise. The company’s long-term expected growth rate of 14.6% compares with the industry’s growth projection of 10.5%. DaVita’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed once, the average surprise being 17.3%.
DaVita is witnessing an upward trend in its stock price, prompted by its strength in its DaVita Kidney Care. The optimism led by a solid first-quarter 2023 performance and the acquisition of dialysis centers are expected to contribute further. However, concerns regarding dependence on commercial payers and integration risks persist.
Image Source: Zacks Investment Research
Let’s delve deeper.
Key Growth Drivers
DaVita Kidney Care: Investors are optimistic about DaVita Kidney Care, the major revenue-generating segment of DVA. It specializes in a broad array of dialysis services, significantly contributing to the company's top line. With respect to DaVita’s Integrated Kidney Care, as of Mar 31, 2023, the company had approximately 67,000 patients in risk-based integrated care arrangements, representing approximately $5.2 billion in annualized medical spend. DaVita also had an additional 15,000 patients in other integrated care arrangements.
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. These strategies have boosted the company’s top line to a large extent, raising investors’ optimism.
As of Mar 31, 2023, DaVita provided dialysis services to around 246,000 patients at 3,058 outpatient dialysis centers, of which 2,707 were U.S. centers while 351 were located across 11 other countries. During the first quarter of 2023, the company opened a total of three new dialysis centers in the United States. It also opened three dialysis centers outside the United States in the same period.
Strong Q1 Results: DaVita’s solid first-quarter 2023 results buoy optimism. The company registered an uptick in its overall top line and both segments during the period. DaVita also recorded an increase in total U.S. dialysis treatments during the quarter.
Downsides
Dependence on Commercial Payers: A significant portion of DaVita’s dialysis and related lab services’ revenues are generated from patients who have commercial payers as the primary payers. The payments received from commercial payers are the primary generators of profit. However, there remains a risk of people shifting from commercial insurance schemes to government schemes due to the wide disparity in payment rates in case of a rise in unemployment.
Integration Risks: 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 operations.
Other Key Picks
A few other top-ranked stocks in the broader medical space are Hologic, Inc. (HOLX - Free Report) , HealthEquity, Inc. (HQY - Free Report) and Boston Scientific Corporation (BSX - Free Report) .
Hologic, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated growth rate of 5.1% for fiscal 2024. HOLX’s earnings surpassed estimates in all the trailing four quarters, with an average of 27.3%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Hologic has gained 11.1% compared with the industry’s 13.8% rise in the past year.
HealthEquity, flaunting a Zacks Rank #1 at present, has an estimated long-term growth rate of 22%. HQY’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 9.1%.
HealthEquity has gained 13.5% against the industry’s 14.5% decline over the past year.
Boston Scientific, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 11.5%. BSX’s earnings surpassed estimates in two of the trailing four quarters and missed in the other two, the average surprise being 1.9%.
Boston Scientific has gained 42.9% against the industry’s 22% decline over the past year.
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DaVita (DVA) Hits 52-Week High: What's Driving the Stock?
Shares of DaVita Inc. (DVA - Free Report) scaled a new 52-week high of $104.72 on Jul 10, before closing the session slightly lower at $103.69.
Over the past year, this Zacks Rank #2 (Buy) stock has gained 22.7% against the 7.1% decline of the industry. The S&P 500 has witnessed 15.2% growth in the said time frame.
Over the past five years, the company registered earnings growth of 12.9% compared with the industry’s 5.9% rise. The company’s long-term expected growth rate of 14.6% compares with the industry’s growth projection of 10.5%. DaVita’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed once, the average surprise being 17.3%.
DaVita is witnessing an upward trend in its stock price, prompted by its strength in its DaVita Kidney Care. The optimism led by a solid first-quarter 2023 performance and the acquisition of dialysis centers are expected to contribute further. However, concerns regarding dependence on commercial payers and integration risks persist.
Image Source: Zacks Investment Research
Let’s delve deeper.
Key Growth Drivers
DaVita Kidney Care: Investors are optimistic about DaVita Kidney Care, the major revenue-generating segment of DVA. It specializes in a broad array of dialysis services, significantly contributing to the company's top line. With respect to DaVita’s Integrated Kidney Care, as of Mar 31, 2023, the company had approximately 67,000 patients in risk-based integrated care arrangements, representing approximately $5.2 billion in annualized medical spend. DaVita also had an additional 15,000 patients in other integrated care arrangements.
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. These strategies have boosted the company’s top line to a large extent, raising investors’ optimism.
As of Mar 31, 2023, DaVita provided dialysis services to around 246,000 patients at 3,058 outpatient dialysis centers, of which 2,707 were U.S. centers while 351 were located across 11 other countries. During the first quarter of 2023, the company opened a total of three new dialysis centers in the United States. It also opened three dialysis centers outside the United States in the same period.
Strong Q1 Results: DaVita’s solid first-quarter 2023 results buoy optimism. The company registered an uptick in its overall top line and both segments during the period. DaVita also recorded an increase in total U.S. dialysis treatments during the quarter.
Downsides
Dependence on Commercial Payers: A significant portion of DaVita’s dialysis and related lab services’ revenues are generated from patients who have commercial payers as the primary payers. The payments received from commercial payers are the primary generators of profit. However, there remains a risk of people shifting from commercial insurance schemes to government schemes due to the wide disparity in payment rates in case of a rise in unemployment.
Integration Risks: 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 operations.
Other Key Picks
A few other top-ranked stocks in the broader medical space are Hologic, Inc. (HOLX - Free Report) , HealthEquity, Inc. (HQY - Free Report) and Boston Scientific Corporation (BSX - Free Report) .
Hologic, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated growth rate of 5.1% for fiscal 2024. HOLX’s earnings surpassed estimates in all the trailing four quarters, with an average of 27.3%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Hologic has gained 11.1% compared with the industry’s 13.8% rise in the past year.
HealthEquity, flaunting a Zacks Rank #1 at present, has an estimated long-term growth rate of 22%. HQY’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 9.1%.
HealthEquity has gained 13.5% against the industry’s 14.5% decline over the past year.
Boston Scientific, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 11.5%. BSX’s earnings surpassed estimates in two of the trailing four quarters and missed in the other two, the average surprise being 1.9%.
Boston Scientific has gained 42.9% against the industry’s 22% decline over the past year.