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DaVita Rallies 44% Year to Date: What's Driving the Stock?
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DaVita (DVA - Free Report) has witnessed strong momentum year to date, with its shares up 44% compared with the industry growth of 17.9%. The S&P 500 composite has risen 18.4% in the year-to-date period.
DaVita, carrying a Zacks Rank #1 (Strong Buy) at present, is witnessing an upward trend in its stock price, prompted by the company’s business model. The optimism, led by a solid second-quarter 2024 performance and the acquisition of dialysis centers, is expected to contribute further.
Denver, CO-headquartered DaVita, is a leading provider of dialysis services in the United States to patients suffering from chronic kidney failure, also known as end-stage renal disease (ESRD). The company operates kidney dialysis centers and provides related medical services, primarily in dialysis centers and contracted hospitals across the country. Its services include outpatient dialysis services, hospital inpatient dialysis services and ancillary services such as ESRD laboratory services and disease management services.
Image Source: Zacks Investment Research
Catalysts Driving DaVita’s Growth
The rally in the company’s share price can be attributed to strength in its Dialysis and related lab services. The optimism led by a solid second-quarter 2024 performance and robust business potential are expected to contribute further.
Investors are quite optimistic about DaVita's patient-centric care approach, which makes the most of its kidney care services platform to provide patients with as many options as possible for models and modalities of care. In the arena of kidney health, value-based partnerships are becoming more and more typical. These partnerships allow nephrologists, physicians and transplant programs to work together more closely, which improves the understanding of each patient's clinical needs. The management anticipates that this will lead to better care coordination and early intervention.
Acquiring dialysis centers and businesses that own and operate dialysis centers as well as other ancillary services is DaVita’s preferred business strategy. In this line, earlier this year, DVA extended the pilot phase of a previously announced supply and collaboration agreement with Nuwellis. At the conclusion of the pilot phase (ending Aug. 31, 2024), DaVita may extend the supply agreement with Nuwellis for continued provision of both inpatient and outpatient ultrafiltration services for up to 10 years.
DaVita's global market share is steadily expanding. Earlier this year, the company had signed an agreement to extend its global operations into Brazil and Colombia as well as to enter Chile and Ecuador.
Meanwhile, DaVita exited the second quarter of 2024 with better-than-expected results. The uptick in the company’s overall top and bottom lines’ performances seemed encouraging. Strength in both dialysis patient service and Other revenues in this period was impressive. The per-day increase in total U.S. dialysis treatments for the second quarter on a sequential basis and the opening of dialysis centers within the United States and acquiring centers overseas were promising. The expansion of both margins bodes well for the stock.
DVA has also raised its earnings projections for fiscal 2024, which are also likely to have interested investors. Adjusted EPS for the full year is now projected to be in the range of $9.25-$10.05, up from the previous range of $9-$9.80.
Factor That May Offset the Gains for DaVita
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.
Other Key Picks
Some other top-ranked stocks in the broader medical space are Universal Health Service (UHS - Free Report) , Quest Diagnostics (DGX - Free Report) and ABM Industries (ABM - Free Report) . While Universal Health Service sports a Zacks Rank #1, Quest Diagnostics and ABM Industries carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Universal Health Service has an estimated long-term growth rate of 19%. UHS’ earnings surpassed estimates in each of the trailing four quarters, with the average being 14.58%. Universal Health Service has gained 56.1% compared with the industry's 48.1% growth so far this year.
Quest Diagnostics has an estimated long-term growth rate of 6.20%. DGX’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 3.31%. Quest Diagnostics shares have gained 13.9% so far this year compared with the industry’s 17.9% growth.
ABM Industries’ earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 7.34%. ABM's shares have risen 27.4% so far this year compared with the industry’s 17% growth.
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DaVita Rallies 44% Year to Date: What's Driving the Stock?
DaVita (DVA - Free Report) has witnessed strong momentum year to date, with its shares up 44% compared with the industry growth of 17.9%. The S&P 500 composite has risen 18.4% in the year-to-date period.
DaVita, carrying a Zacks Rank #1 (Strong Buy) at present, is witnessing an upward trend in its stock price, prompted by the company’s business model. The optimism, led by a solid second-quarter 2024 performance and the acquisition of dialysis centers, is expected to contribute further.
Denver, CO-headquartered DaVita, is a leading provider of dialysis services in the United States to patients suffering from chronic kidney failure, also known as end-stage renal disease (ESRD). The company operates kidney dialysis centers and provides related medical services, primarily in dialysis centers and contracted hospitals across the country. Its services include outpatient dialysis services, hospital inpatient dialysis services and ancillary services such as ESRD laboratory services and disease management services.
Image Source: Zacks Investment Research
Catalysts Driving DaVita’s Growth
The rally in the company’s share price can be attributed to strength in its Dialysis and related lab services. The optimism led by a solid second-quarter 2024 performance and robust business potential are expected to contribute further.
Investors are quite optimistic about DaVita's patient-centric care approach, which makes the most of its kidney care services platform to provide patients with as many options as possible for models and modalities of care. In the arena of kidney health, value-based partnerships are becoming more and more typical. These partnerships allow nephrologists, physicians and transplant programs to work together more closely, which improves the understanding of each patient's clinical needs. The management anticipates that this will lead to better care coordination and early intervention.
Acquiring dialysis centers and businesses that own and operate dialysis centers as well as other ancillary services is DaVita’s preferred business strategy. In this line, earlier this year, DVA extended the pilot phase of a previously announced supply and collaboration agreement with Nuwellis. At the conclusion of the pilot phase (ending Aug. 31, 2024), DaVita may extend the supply agreement with Nuwellis for continued provision of both inpatient and outpatient ultrafiltration services for up to 10 years.
DaVita's global market share is steadily expanding. Earlier this year, the company had signed an agreement to extend its global operations into Brazil and Colombia as well as to enter Chile and Ecuador.
Meanwhile, DaVita exited the second quarter of 2024 with better-than-expected results. The uptick in the company’s overall top and bottom lines’ performances seemed encouraging. Strength in both dialysis patient service and Other revenues in this period was impressive. The per-day increase in total U.S. dialysis treatments for the second quarter on a sequential basis and the opening of dialysis centers within the United States and acquiring centers overseas were promising. The expansion of both margins bodes well for the stock.
DVA has also raised its earnings projections for fiscal 2024, which are also likely to have interested investors. Adjusted EPS for the full year is now projected to be in the range of $9.25-$10.05, up from the previous range of $9-$9.80.
Factor That May Offset the Gains for DaVita
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.
Other Key Picks
Some other top-ranked stocks in the broader medical space are Universal Health Service (UHS - Free Report) , Quest Diagnostics (DGX - Free Report) and ABM Industries (ABM - Free Report) . While Universal Health Service sports a Zacks Rank #1, Quest Diagnostics and ABM Industries carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Universal Health Service has an estimated long-term growth rate of 19%. UHS’ earnings surpassed estimates in each of the trailing four quarters, with the average being 14.58%. Universal Health Service has gained 56.1% compared with the industry's 48.1% growth so far this year.
Quest Diagnostics has an estimated long-term growth rate of 6.20%. DGX’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 3.31%. Quest Diagnostics shares have gained 13.9% so far this year compared with the industry’s 17.9% growth.
ABM Industries’ earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 7.34%. ABM's shares have risen 27.4% so far this year compared with the industry’s 17% growth.