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Here's Why You Should Retain DaVita in Your Portfolio Now
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DaVita, Inc. (DVA - Free Report) is gaining on its Kidney Care segment and overseas growth. However, declining calcimetrics revenues have been offsetting the positives.
The company, with a market capitalization of $9.87 billion, is a leading provider of dialysis services to the healthcare industry. The company’s earnings are expected to improve 9.1% over the next five years. Also, this Zacks Rank #3 (Hold) company has a trailing four-quarter positive earnings surprise of 18.2%, on average.
In the past six months, the stock has gained 7.2% against the 2.4% decline of its industry.
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, thereby significantly contributing to the topline.
DaVita Kidney Care focuses on setting worldwide standards for clinical, social and operational practices in kidney care. In May 2020, DaVita launched the DaVita Venture Group (“DVG”), through which it plans to accelerate efforts to develop and deploy solutions aimed at improving the health care and quality of life for patients with kidney disease and related chronic conditions.
DaVita Kidney Care also provides support to nephrologist-led organizations like Nephrology Care Alliance (“NCA”) in their endeavor to treat chronic kidney disease patients.
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 boost the company’s top line to a large extent.
During the first quarter, DaVita opened a total of 22 new dialysis centers and acquired two in the country. Outside the United States, the company launched three new dialysis centers and acquired 22.
Overseas Growth: 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. Currently, DaVita is seeking to expand in major European and Asian countries via acquisitions and partnerships.
DaVita realized around $2 million of operating income from its international operations in the fourth quarter.
During the first quarter, the company made $10 million of foreign exchange gain from its Asia joint venture.
However, there is a concerning factor.
Calcimimetics Down: Per management, the profitability of calcimimetics was on a declining trajectory by the end of the first quarter. For 2020, DaVita continues to expect $40-$70 million of operating income from calcimimetics. Also, due to unfavorable timing of calcimimetics and ballot-related costs, management expects some fluctuations in second-half 2020 earnings per share.
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 $6.13 per share from $6.04 per share.
The Zacks Consensus Estimate for second-quarter fiscal 2020 revenues is pegged at $2.91 billion, suggesting a 2.5% rise from the year-ago reported number.
Key Picks
A few better-ranked stocks from the broader medical space include Laboratory Corporation of America Holdings (LH - Free Report) , Surmodics (SRDX - Free Report) and Quest Diagnostics (DGX - Free Report) .
Surmodics’ long-term earnings growth rate is estimated at 10%. The company presently carries a Zacks Rank #2.
Quest Diagnostics’ long-term earnings growth rate is estimated at 7.6%. It currently carries a Zacks Rank #1.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.1% per year. These 7 were selected because of their superior potential for immediate breakout.
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Here's Why You Should Retain DaVita in Your Portfolio Now
DaVita, Inc. (DVA - Free Report) is gaining on its Kidney Care segment and overseas growth. However, declining calcimetrics revenues have been offsetting the positives.
The company, with a market capitalization of $9.87 billion, is a leading provider of dialysis services to the healthcare industry. The company’s earnings are expected to improve 9.1% over the next five years. Also, this Zacks Rank #3 (Hold) company has a trailing four-quarter positive earnings surprise of 18.2%, on average.
In the past six months, the stock has gained 7.2% against the 2.4% decline of its industry.
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, thereby significantly contributing to the topline.
DaVita Kidney Care focuses on setting worldwide standards for clinical, social and operational practices in kidney care. In May 2020, DaVita launched the DaVita Venture Group (“DVG”), through which it plans to accelerate efforts to develop and deploy solutions aimed at improving the health care and quality of life for patients with kidney disease and related chronic conditions.
DaVita Kidney Care also provides support to nephrologist-led organizations like Nephrology Care Alliance (“NCA”) in their endeavor to treat chronic kidney disease patients.
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 boost the company’s top line to a large extent.
During the first quarter, DaVita opened a total of 22 new dialysis centers and acquired two in the country. Outside the United States, the company launched three new dialysis centers and acquired 22.
Overseas Growth: 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. Currently, DaVita is seeking to expand in major European and Asian countries via acquisitions and partnerships.
DaVita realized around $2 million of operating income from its international operations in the fourth quarter.
During the first quarter, the company made $10 million of foreign exchange gain from its Asia joint venture.
However, there is a concerning factor.
Calcimimetics Down: Per management, the profitability of calcimimetics was on a declining trajectory by the end of the first quarter. For 2020, DaVita continues to expect $40-$70 million of operating income from calcimimetics. Also, due to unfavorable timing of calcimimetics and ballot-related costs, management expects some fluctuations in second-half 2020 earnings per share.
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 $6.13 per share from $6.04 per share.
The Zacks Consensus Estimate for second-quarter fiscal 2020 revenues is pegged at $2.91 billion, suggesting a 2.5% rise from the year-ago reported number.
Key Picks
A few better-ranked stocks from the broader medical space include Laboratory Corporation of America Holdings (LH - Free Report) , Surmodics (SRDX - Free Report) and Quest Diagnostics (DGX - Free Report) .
LabCorp’s long-term earnings growth rate is estimated at 6.1%. The company presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Surmodics’ long-term earnings growth rate is estimated at 10%. The company presently carries a Zacks Rank #2.
Quest Diagnostics’ long-term earnings growth rate is estimated at 7.6%. It currently carries a Zacks Rank #1.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.1% per year. These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>