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Davita (DVA) Shares Gain This Week: Will the Rally Continue?
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Shares of DaVita Inc. (DVA - Free Report) jumped this week, especially on Tuesday, following an announcement by Novo Nordisk (NVO - Free Report) that its obesity treatment significantly lowered the mortality risk among patients with chronic kidney disease by 24%. However, the metric failed to cheer Novo Nordisk’s investors, driving dialysis provider DaVita’s shares along with other industry players like Fresenius Medical Care (FMS - Free Report)
Previously, Novo Nordisk halted the so-called FLOW study nearly a year ahead of schedule, achieving its success criteria sooner than anticipated. This announcement had previously caused DaVita's shares to plummet by nearly 17%. DaVita is known for its operation of dialysis centers catering to chronic kidney disease patients.
However, this Tuesday, Novo disclosed detailed outcomes from the eagerly awaited study, indicating that weight-loss medications do not diminish the demand for dialysis services.
As a result, DaVita's shares are up 5.7% this week so far. Similarly, shares of Fresenius Medical Care saw a 6.7% increase this week. Conversely, shares of Novo Nordisk experienced a 2.6% decline on Tuesday following the study data readout. DaVita's stock is now approaching its all-time high of $136.48, set in mid-2021, reflecting the continuation of the uptrend.
In the past six months, shares of DVA are up 39.2% compared with the industry’s 16.1% increase and the S&P 500’s 10.8% gain.
Image Source: Zacks Investment Research
Novo Nordisk’s Study Data
The FLOW study showed that in patients with Type 2 diabetes and chronic kidney disease, a weekly dosage of the drug semaglutide resulted in a 24% reduction in the risk of death from kidney or cardiovascular issues compared to those receiving a placebo. Additionally, the semaglutide group showed a decreased risk of their kidney disease worsening.
Novo Nordisk plans to seek approval from the Food and Drug Administration for semaglutide, marketed as Wegovy for weight loss and as Ozempic for diabetes treatment, for use in patients with Type 2 diabetes and chronic kidney disease.
Per this Reuters article, investors remain concerned that the benefits of GLP-1 drugs such as Ozempic are related to cardiac events rather than a game-changing extension in kidney disease progression. This seems beneficial for dialysis providers going forward as it removes the risk of a rising competing factor.
DaVita currently sports a Zacks Rank #1 (Strong Buy).
Cardinal Health (CAH - Free Report) , also sporting a Zacks Rank of 1 at present, is another stock to consider from the medical sector. The company has an estimated long-term growth rate of 15.9%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 15.6%.
CAH’s shares have risen 51.6% compared with the industry’s 14% growth in the past year.
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Davita (DVA) Shares Gain This Week: Will the Rally Continue?
Shares of DaVita Inc. (DVA - Free Report) jumped this week, especially on Tuesday, following an announcement by Novo Nordisk (NVO - Free Report) that its obesity treatment significantly lowered the mortality risk among patients with chronic kidney disease by 24%. However, the metric failed to cheer Novo Nordisk’s investors, driving dialysis provider DaVita’s shares along with other industry players like Fresenius Medical Care (FMS - Free Report)
Previously, Novo Nordisk halted the so-called FLOW study nearly a year ahead of schedule, achieving its success criteria sooner than anticipated. This announcement had previously caused DaVita's shares to plummet by nearly 17%. DaVita is known for its operation of dialysis centers catering to chronic kidney disease patients.
However, this Tuesday, Novo disclosed detailed outcomes from the eagerly awaited study, indicating that weight-loss medications do not diminish the demand for dialysis services.
As a result, DaVita's shares are up 5.7% this week so far. Similarly, shares of Fresenius Medical Care saw a 6.7% increase this week. Conversely, shares of Novo Nordisk experienced a 2.6% decline on Tuesday following the study data readout. DaVita's stock is now approaching its all-time high of $136.48, set in mid-2021, reflecting the continuation of the uptrend.
In the past six months, shares of DVA are up 39.2% compared with the industry’s 16.1% increase and the S&P 500’s 10.8% gain.
Image Source: Zacks Investment Research
Novo Nordisk’s Study Data
The FLOW study showed that in patients with Type 2 diabetes and chronic kidney disease, a weekly dosage of the drug semaglutide resulted in a 24% reduction in the risk of death from kidney or cardiovascular issues compared to those receiving a placebo. Additionally, the semaglutide group showed a decreased risk of their kidney disease worsening.
Novo Nordisk plans to seek approval from the Food and Drug Administration for semaglutide, marketed as Wegovy for weight loss and as Ozempic for diabetes treatment, for use in patients with Type 2 diabetes and chronic kidney disease.
Per this Reuters article, investors remain concerned that the benefits of GLP-1 drugs such as Ozempic are related to cardiac events rather than a game-changing extension in kidney disease progression. This seems beneficial for dialysis providers going forward as it removes the risk of a rising competing factor.
DaVita Inc. Price
DaVita Inc. price | DaVita Inc. Quote
Zacks Rank & Another Stock to Consider
DaVita currently sports a Zacks Rank #1 (Strong Buy).
Cardinal Health (CAH - Free Report) , also sporting a Zacks Rank of 1 at present, is another stock to consider from the medical sector. The company has an estimated long-term growth rate of 15.9%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 15.6%.
CAH’s shares have risen 51.6% compared with the industry’s 14% growth in the past year.