Chronic kidney disease (CKD) is possibly the ninth leading cause of death in the United States. Per the National Kidney Foundation, every one in seven American adults is suffering from CKD.
A study of JOJ Urology and Nephrology states that End Stage Renal Disease (ESRD) – the last stage of CKD — impacts over 700,000 Americans annually. Veterans are at a high risk of CKD, thanks to an aging population, high blood pressure and diabetes.
Consequently, renal care companies are raking in billions on increasing demand for kidney-care treatments. Here, we discuss how companies have been creating opportunities for investors keen on parking their money in the healthcare space.
Demand for Kidney-Care Treatments Rises
Dialysis is currently the most preferred procedure for the treatment of kidney diseases. Demand for both hemodialysis (HD) and Peritoneal dialysis (PD) has been growing on factors like growth in kidney function tests and rising prevalence of kidney diseases. An article by MarketsandMarkets validates that the global HD and PD market is estimated to reach a worth of $83.89 billion by 2021, at a CAGR of 6%.
Presently, dialysis services are available even in storefronts and industrial parks apart from hospitals. We believe that improved health infrastructure of developed nations such as the United States also drives the demand for dialysis.
According to the U.S. Renal Data System, an HD can cost $72,000, while PD charges are about $53,000 a year.
Stocks to Keep an Eye On
Against this backdrop, investors may want to take note of a few companies offering dialysis services. We have zeroed in on stocks with a Zacks Rank #3 (Hold) and a Growth Score of B. Notably, the Growth Style Score of A or B reflects possibilities of outperformance by the stocks over the long haul. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Our first pick is Colorado-based DaVita Inc. (DVA - Free Report) , the leading provider of dialysis services to chronic kidney failure patients. The stock has a long-term earnings growth rate of 16.8%. In the past year, shares of DaVita have rallied 17% compared with the S&P 500 index’s rise of 17.6%.
For the current quarter, the Zacks Consensus Estimate for earnings is pegged at 90 cents reflecting growth of 11.1%.
DaVita Kidney Care, an operating division of the company, has been successfully driving its top line. In the last reported quarter, its Kidney Care business garnered revenues worth $2.87 billion, up 7% year over year. Moreover, the company has been acquiring dialysis centers, which has lent it a competitive edge in the industry.
Next on our list is Baxter International Inc. (BAX - Free Report) . The Illinois-based medical technology bigwig’s expected long-term earnings growth rate is 12.4%. In the past year, shares of Baxter have rallied 17.9%.
For the current quarter, the Zacks Consensus Estimate for earnings is pinned at 74 cents, showing year-over-year growth of 15.6%.
Baxter has a core Renal segment which primarily offers PD and HD therapies. In the last reported quarter, the segment’s revenues totaled $931 million, up 9% year over year.
Recently in Japan, the company’s renal team initiated the launch of the KAGUYA PD technology. Moreover, Baxter’s SHARESOURCE is the only globally available two-way, telehealth system that helps healthcare providers manage home PD patients. The company has also launched a new version of its AK 98 HD system to help dialysis providers minimize operational challenges.
Investors may also take a look at Fresenius Medical Care AG & Co. KGaA (FMS - Free Report) . The German dialysis provider’s long-term earnings growth rate is pegged at 7.1%. Shares of the company have rallied 4.6% in a year’s time.
For the current quarter, the Zacks Consensus Estimate for earnings is pinned at 67 cents, showing growth of 13.6% year over year.
Fresenius Medical offers a wide spectrum of dialysis products like modular machine components, dialyzers, bloodline systems, HD solutions, concentrates and water treatment systems. HD, PD and acute dialysis products are offered as well. The company also has a strong global foothold. In the last reported quarter, it saw revenue growth across all its geographical zones, viz, North America, EMEA, Asia-Pacific and Latin America.
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