DaVita Healthcare Partners, Inc. (DVA) is set to report third-quarter 2014 earnings on Nov 6, 2014. Last quarter, it delivered a positive earnings surprise of 7.95%. Let us see how things are shaping up for this announcement.
Factors Affecting the Past Quarter
DaVita Healthcare’s global foothold and acquisitions are expected to contribute positively to earnings. The contract extension with Fresenius Medical Care (FMC) is expected to generate more clients for DaVita. Moreover, steady expansion in the international market, particularly in emerging economies through strategic alliances and acquisitions will expectedly help the company come up with improved numbers,
However, DaVita Healthcare’s debt refinancing continues to keep the company’s financial leverage at high levels, which might weigh on earnings this season. Moreover, owing to the new screening procedures designed by the Centers for Medicare and Medicaid Services (CMS), the Medicare contractor approval was delayed, thereby causing a delay in reimbursement. This may adversely affect revenues.
Earnings Whispers?
Our proven model does not conclusively show that DaVita Healthcare is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: DaVita Healthcare has an ESP of 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate both stand at 89 cents per share, making the difference 0.00%.
Zacks Rank: DaVita Healthcare carries a Zacks Rank #4 (Sell). We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks to Consider
Here are some companies in the medical sector you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
AmSurg Corp. (AMSG) has Earnings ESP of +18.52% and a Zacks Rank #1 (Strong Buy).
Medivation, Inc. (MDVN) has Earnings ESP of +7.34% and a Zacks Rank #1.
Alnylam Pharmaceuticals, Inc. (ALNY) has Earnings ESP of +9.23% and a Zacks Rank #2 (Buy).
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