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Here's Why You Should Hold on to DaVita (DVA) Stock For Now
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DaVita Inc. (DVA - Free Report) is well poised for growth in the coming quarters, backed by strength in its DaVita Kidney Care. A robust first-quarter 2022 performance, along with impressive overseas growth, is expected to contribute further. However, concerns regarding integration risks and dependence on commercial payers persist.
Over the past year, this Zacks Rank #3 (Hold) stock has lost 28.1% compared with 51.4% fall of the industry and the 13.6% decline of the S&P 500.
The renowned global comprehensive kidney care provider has a market capitalization of $8.47 billion. The company projects 10.6% growth for the next five years and expects to maintain its strong performance. DaVita’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed the same in the other, the average surprise being 7.4%.
Image Source: Zacks Investment Research
Let’s delve deeper.
DaVita Kidney Care: We are optimistic about DaVita Kidney Care, the major revenue-generating segment of DVA. It specializes in a broad array of dialysis services, thereby significantly contributing to the company's top line. DaVita’s dialysis patient service revenues registered year-over-year growth during the quarter. With respect to DaVita Integrated Kidney Care, the company had approximately 40,000 patients in risk-based integrated care arrangements, representing approximately $3.3 billion in annualized medical spending as of Mar 31, 2022. DaVita had an additional 8,000 patients in other integrated care arrangements.
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, which raises our optimism. During the quarter, DaVita saw solid revenue growth from international dialysis patient service and other.
As of Mar 31, 2022, DaVita had provided dialysis services to a total of approximately 241,800 patients at 3,155 outpatient dialysis centers, of which 2,809 are in the United States and 346 are in 11 other countries.
Strong Q1 Results: DaVita’s solid first-quarter 2022 results buoy optimism. The company registered improvement in dialysis patient service revenues during the first quarter of 2022. The acquisition of several dialysis centers and opening of others, both within the United States and overseas, are promising. DaVita’s partnership with various nephrologists is also encouraging. DaVita has been steadily expanding its foothold in international markets, thereby recording strong performances.
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 (JVs). The company may engage in acquisitions, mergers, JVs or dispositions, or expand into new business models, which may affect its operational results.
Estimate Trend
DaVita is witnessing a negative estimate revision trend for 2022. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 3.7% south to $7.79.
The Zacks Consensus Estimate for the company’s second-quarter 2022 revenues is pegged at $2.93 billion, suggesting a 0.5% improvement from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , Omnicell, Inc. (OMCL - Free Report) and Masimo Corporation (MASI - Free Report) .
AMN Healthcare, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 1.1%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 15.6%.
AMN Healthcare has gained 4.1% against the industry’s 54.5% fall in the past year.
Omnicell, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 20%. OMCL’s earnings surpassed estimates in three of the trailing four quarters and missed the same in the other, the average beat being 13.4%.
Omnicell has lost 27.1% compared with the industry’s 60.2% fall over the past year.
Masimo, carrying a Zacks Rank #2 at present, has an earnings yield of 3.7% against the industry’s negative yield. MASI’s earnings surpassed estimates in the trailing four quarters, the average beat being 4.4%.
Masimo has lost 48.2% compared with the industry’s 29.7% fall over the past year.
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Here's Why You Should Hold on to DaVita (DVA) Stock For Now
DaVita Inc. (DVA - Free Report) is well poised for growth in the coming quarters, backed by strength in its DaVita Kidney Care. A robust first-quarter 2022 performance, along with impressive overseas growth, is expected to contribute further. However, concerns regarding integration risks and dependence on commercial payers persist.
Over the past year, this Zacks Rank #3 (Hold) stock has lost 28.1% compared with 51.4% fall of the industry and the 13.6% decline of the S&P 500.
The renowned global comprehensive kidney care provider has a market capitalization of $8.47 billion. The company projects 10.6% growth for the next five years and expects to maintain its strong performance. DaVita’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed the same in the other, the average surprise being 7.4%.
Image Source: Zacks Investment Research
Let’s delve deeper.
DaVita Kidney Care: We are optimistic about DaVita Kidney Care, the major revenue-generating segment of DVA. It specializes in a broad array of dialysis services, thereby significantly contributing to the company's top line. DaVita’s dialysis patient service revenues registered year-over-year growth during the quarter. With respect to DaVita Integrated Kidney Care, the company had approximately 40,000 patients in risk-based integrated care arrangements, representing approximately $3.3 billion in annualized medical spending as of Mar 31, 2022. DaVita had an additional 8,000 patients in other integrated care arrangements.
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, which raises our optimism. During the quarter, DaVita saw solid revenue growth from international dialysis patient service and other.
As of Mar 31, 2022, DaVita had provided dialysis services to a total of approximately 241,800 patients at 3,155 outpatient dialysis centers, of which 2,809 are in the United States and 346 are in 11 other countries.
Strong Q1 Results: DaVita’s solid first-quarter 2022 results buoy optimism. The company registered improvement in dialysis patient service revenues during the first quarter of 2022. The acquisition of several dialysis centers and opening of others, both within the United States and overseas, are promising. DaVita’s partnership with various nephrologists is also encouraging. DaVita has been steadily expanding its foothold in international markets, thereby recording strong performances.
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 (JVs). The company may engage in acquisitions, mergers, JVs or dispositions, or expand into new business models, which may affect its operational results.
Estimate Trend
DaVita is witnessing a negative estimate revision trend for 2022. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 3.7% south to $7.79.
The Zacks Consensus Estimate for the company’s second-quarter 2022 revenues is pegged at $2.93 billion, suggesting a 0.5% improvement from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , Omnicell, Inc. (OMCL - Free Report) and Masimo Corporation (MASI - Free Report) .
AMN Healthcare, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 1.1%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 15.6%.
You can see the complete list of today’s Zacks #1 Rank stocks here.
AMN Healthcare has gained 4.1% against the industry’s 54.5% fall in the past year.
Omnicell, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 20%. OMCL’s earnings surpassed estimates in three of the trailing four quarters and missed the same in the other, the average beat being 13.4%.
Omnicell has lost 27.1% compared with the industry’s 60.2% fall over the past year.
Masimo, carrying a Zacks Rank #2 at present, has an earnings yield of 3.7% against the industry’s negative yield. MASI’s earnings surpassed estimates in the trailing four quarters, the average beat being 4.4%.
Masimo has lost 48.2% compared with the industry’s 29.7% fall over the past year.