TD Cowen analyst Gary Taylor maintained a Hold rating on DaVita (DVA – Research Report) yesterday and set a price target of $112.00.
Gary Taylor’s Hold rating on DaVita’s stock (ticker: DVA) is influenced by a variety of factors.
Firstly, he noted the substantial 20% ($88m) Operating Income (OI) beat in 3Q23, with approximately $50m brought forward from 4Q23. He also observed the 4% raise in 2023G OI and a preliminary 2024G OI outlook that is roughly $100m (+6%) above consensus. Taylor was also convinced by DaVita’s thorough rebuttal of the GLP short thesis and was optimistic about the resumption of the company’s suspended share repurchase program in 4Q23. This led Taylor to expect the shares to trade significantly higher in the near future.
Taylor also took into account the 3Q23 results which showed a total net revenue of $3.12 billion, 3.4%/4.0% above consensus/TD Cowen estimates. The impressive adjusted Operating Income (OI) of $525m (excluding $29m of closure/severance/other costs) was well above consensus/TD Cowen. The patient care costs were also lower than estimated, which was a positive factor. However, Taylor also noted that the G&A ratio was above consensus and TD Cowen estimates. These factors, combined with the company’s raised 2023 guidance and the quality of earnings in 3Q23, led Taylor to give a Hold rating for DaVita’s stock.
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DaVita (DVA) Company Description:
DaVita, Inc. engages in the provision of medical care services. It operates through the following two segments: US Dialysis and Related Lab Services; and Other-Ancillary Services and Strategic Initiatives. The US Dialysis and Related Lab Services segment offers kidney dialysis services in the United States for patients suffering from chronic kidney failure. The Other-Ancillary Services and Strategic Initiatives segment consist primarily of pharmacy services, disease management services, vascular access services, clinical research programs, physician services, direct primary care, end stage renal disease seamless care organizations, and comprehensive care. The company was founded in 1994 and is headquartered in Denver, CO.
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