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DaVita (DVA) Gains 36% YTD: What's Driving the Stock Rally?

DaVita DVA is witnessing strong momentum, with its shares having rallied 36.2% year to date compared with 9% growth of the industry. The S&P 500 composite has risen 6.9% during the same time frame.

DaVita, carrying a Zacks Rank #2 (Buy) at present, is witnessing an upward trend in its stock price, prompted by its business model. The optimism, led by a solid first-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.

Zacks Investment Research
Zacks Investment Research


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Catalysts Driving 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 first-quarter 2024 performance and robust business potential, is expected to contribute further.

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Investors are optimistic about DaVita’s patient-centric care model, which leverages its platform of kidney care services to maximize patient choice in both models and modalities of care. Value-based arrangements are proliferating in the kidney health space. These arrangements allow for a much larger degree of collaboration between nephrologists, providers and transplant programs, resulting in a more complete understanding of each patient’s clinical needs. Per management, this is expected to lead to better care coordination and earlier intervention.

DaVita’s solid first-quarter 2024 results buoy optimism. The company registered an uptick in its overall top-line and bottom-line numbers. Strength in both dialysis patient service and Other revenues during the period was also seen. The expansion of both margins bodes well for the company.

Acquiring dialysis centers and businesses that own and operate dialysis centers as well as other ancillary services is DaVita’s preferred business strategy. Such strategies have boosted the company’s top line to a large extent, raising investors’ optimism. Earlier this year, DVA extended the pilot phase of a previously announced supply and collaboration agreement with Nuwellis until Aug 31, 2024. At the conclusion of the pilot phase, DaVita may extend the supply agreement with Nuwellis for continued provision of both inpatient and outpatient ultrafiltration services for up to 10 years.

As of Mar 31, 2024, DaVita provided dialysis services to around 258,600 patients at 3,092 outpatient dialysis centers, of which 2,665 were in the United States and 427 were located across 12 other countries. In the first quarter of the year, the company acquired and opened a total of 11 dialysis centers in the United States. It also acquired 67 dialysis centers and opened two dialysis centers outside the country during the same period.

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, the company is seeking to expand in major European and Asian countries via acquisitions and partnerships.

DaVita Inc. Price

DaVita Inc. Price
DaVita Inc. Price

DaVita Inc. price | DaVita Inc. Quote

Other Stocks to Consider

Some other top-ranked stocks in the broader medical space that have announced quarterly results are Haemonetics HAE, Ecolab ECL and Boston Scientific Corporation BSX.

Haemonetics, currently sporting a Zacks Rank #1 (Strong Buy), reported fourth-quarter fiscal 2024 adjusted earnings per share (EPS) of 90 cents, which beat the Zacks Consensus Estimate by 2.3%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Haemonetics’ shares have risen 0.5% year to date compared with the industry’s 4% growth. Haemonetics has a long-term growth rate of 12%. HAE’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 13.24%.

Ecolab, carrying a Zacks Rank #2 at present, reported first-quarter 2024 adjusted EPS of $1.34, which beat the Zacks Consensus Estimate by 0.75%. Ecolab’s shares have risen 21.9% year to date against the industry’s 19.9% decline.

Ecolab has a long-term growth rate of 14.3%. ECL’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 1.30%.

Boston Scientific reported first-quarter 2024 adjusted EPS of 56 cents, which beat the Zacks Consensus Estimate by 9.8%. The company currently carries a Zacks Rank #2. Boston Scientific’s shares have risen 33.9% year to date compared with the industry’s 4.1% growth.

Boston Scientific has a long-term growth rate of 12.5%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.49%.

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Boston Scientific Corporation (BSX) : Free Stock Analysis Report

Ecolab Inc. (ECL) : Free Stock Analysis Report

DaVita Inc. (DVA) : Free Stock Analysis Report

Haemonetics Corporation (HAE) : Free Stock Analysis Report

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