Here's Why You Should Add DaVita (DVA) to Your Portfolio Now
DaVita Inc. DVA is gaining from its Kidney Care segment and overseas growth. Acquisition and opening of multiple dialysis centers have also been driving growth lately.
The company, with a market capitalization of $13.59 billion, is a leading provider of dialysis services to the healthcare industry. Its earnings are expected to improve 14.4% over the next year. Also, this currently Zacks Rank #2 (Buy) company has a trailing four-quarter earnings surprise of 21.9%, on average.
Over the past three months, the stock has gained 18.7% compared with 1.8% growth of the industry.
Let’s delve deeper into the factors working in favor of the company.
DaVita Kidney Care: This is the company’s major revenue-generating segment, which specializes in a broad array of dialysis services, thereby significantly contributing to its top line.
DaVita Kidney Care focuses on setting worldwide standards for clinical, social and operational practices in kidney care. In May 2020, the company launched the DaVita Venture Group (DVG) via 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 patients with chronic kidney disease.
Through the first quarter of 2021, the company administered a huge number of vaccines to its patients within the kidney care community. Currently, 72% of its patients nationwide received at least one vaccine dose. Duringthe quarter, DaVita Kidney Care segment continued delivering a strong performance beginning with the treatment of Chronic Kidney Disease (CKD) all the way through End Stage Renal Disease (ESRD) and transplant.
Acquisition of Dialysis Centers: Buying businesses that own and operate dialysis centers as well as other ancillary services is DaVita’s preferred business strategy. This helped boost its top line to a large extent.
As of Mar 31, 2021, the company provided dialysis services to a total of around 238,900 patients at 3,150 outpatient dialysis centers, of which 2,827 were located within the United States and 323 across 10 countries outside the country. During the first quarter of 2021, the company opened a total of 18 dialysis centers in the United States. It also took over three dialysis centers besides unveiling two outside the United States in the same period.
Overseas Growth: DaVita is steadily expanding in the international markets. In the past few years, the company strengthened its position in the emerging and developing markets of Brazil, China, Colombia, Germany, India, Malaysia, the Netherlands, Poland, Portugal and Saudi Arabia through strategic alliances as well as consolidations of dialysis centers.
These are expected to help DaVita deliver more efficient patient care. Currently, the company is seeking an expansion in major European and Asian countries via acquisitions and partnerships.
Estimate Trend
The Zacks Consensus Estimate for 2021 revenues is pegged at $11.58 billion, suggesting a 0.3% rise from the year-ago reported number. The consensus mark for 2021 earnings per share is pegged at $8.90, indicating growth of 22.6% from the year-ago reported number.
Other Stocks to Consider
Some other top-ranked stocks from the broader medical space are The Cooper Companies COO, Veeva Systems VEEV and Boston Scientific BSX, each presently carrying a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Cooper Companies has a projected long-term earnings growth rate of 11%.
Veeva has a projected long-term earnings growth rate of 14.5%.
Boston Scientific has an estimated long-term earnings growth rate of 9.3%.
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