< !DOCTYPE html PUBLIC "-//W3C//DTD HTML 4.01//EN" "http://www.w3.org/TR/html4/strict.dtd">
Davita
(DVA)
Insurance
companies aren’t the only
ones who stand to benefit from healthcare for all. Providers
like DaVita will be able to help
more sick patients under the new plan and in turn generate more
profits.
They
are the premier kidney care provider
in America and serve the more than 400,000 people in need of their
services. They are looking to expand their services
over the coming years which should prove to be a profitable venture
according
to analysts.
Studies
have shown that many on dialysis
are not getting enough treatment. This
is not only true here, but abroad as well. DaVita is working
to make treatment easier,
cheaper and more convenient. They are
growing fast and their stock price is doing the same.
Company Description &
Developments
DaVita currently operates or provides administrative services to
approximately
1400 outpatient dialysis centers located in 43 states and the District
of
Columbia, serving approximately 110,000 patients.
The
company was recently upgraded to
buy at Zacks Equity Research. They cited
strong cash flow and strategic acquisitions.
Just yesterday, DaVita announced a majority stake in Nephrolife
India. This is a longer term strategic
move to expand their services globally.
It’s
important to note that DaVita
has achieved clinical outcomes for patients that have improved
year-over-year
for more than a decade. They are making
people’s lives better not only with their products, but also through
education,
prescription management and assistance with everything from traveling
to home
dialysis solutions.
Financial Profile
DaVita is a mid-cap company (7.56 billion) that is trading at about 17
times
trailing earnings (P/E). Looking forward, Zacks Consensus
Estimates are
calling for that number to drop to 13 with no change in price from
these
levels.
DaVita
hit the Zacks Rank 1 Strong
Buy list just yesterday from a rank of 2.
It has been a buy (Rank 2) since Jan 5, 2011
DaVita
reported a 5.63% quarterly sales
increase at their last earnings report on November 3, 2011.
They
saw year over year sales growth
of 9.46% and a 26% rise in earnings per share in the same period with
total
sales of roughly 6.4 billion in FY2010. DaVita is expected to
earn $5.05
in FY2011 according to the Zacks Consensus Estimate.
Earnings Estimates
We saw one analyst revise next quarter’s earnings estimates up within
the past
month. The others have stood firm on their estimates to
date. DaVita will report
Q4 results on February 16th. Expectations are for DaVita to
generate
$1.48 in income this quarter. Of the 13 analysts who cover
DaVita, the
consensus is for the company to grow earnings by 15.38% in FY2011 with
another
jump of 23.03% in FY2012.
In
terms of the magnitude of analyst
estimate trends, we are seeing all of the consensus estimates higher
than they
were 90 days ago from current quarter, out to FY 2012. It’s
important to note that revisions have
not been dramatically higher.
DaVita
missed estimates last quarter
by 0.68%, with the average earnings surprise being a positive 0.97%
over the
past year. It seems as though analysts
tend to be one point with their estimates in DVA.
Market Performance &
Technicals
The chart for DaVita has gotten particularly strong over the past three
months. DVA has been up for five trading days and has
been riding along the upper edge of its Bollinger band. This
action leads me to believe that we
should see a pullback soon, which would present an opportunity to ride
this recent
momentum.
DVA
has remained above its 50 day
moving average since early November. The
stock is about $8.00 away from its 52 week high of $89.76 which was
made back
in July of 2011.
The
stock just broke above its 200
day moving average of $77.63, which is the first time since August of
2011. I would watch this level for
support and if DVA breaks below it, we might see further selling down
to the 50
day average of $75.84.
DaVita
has outpaced the S&P 500
by 8.17% over the past year and almost 10% over the last twelve weeks.
DVA has kept up its momentum, jumping ahead
of the S&P’s performance by 2% during the last month.
It
might be smart to wait for the
pullback before moving into DVA.
Jared
A Levy is the Momentum Stock
Strategist for Zacks.com. He is also the Editor in charge of the
market-beating
Zacks
Whisper Trader Service.
Be the first to comment