DaVita Touches New 52-Week High - Analyst Blog

On Jun 4, 2014, DaVita Healthcare Partners Inc. DVA reached a new 52-week high of $71.87. The company's shares have been riding high, mainly driven by its efforts to improve patient care and expand globally over the past one year.

Earlier, DaVita had reported first-quarter 2014 earnings. Although the quarterly earnings missed the Zacks Consensus Estimate by 2.30%, this kidney care service provider had previously beaten earnings estimates in two out of the last three quarters with an average surprise of 0.3%.

Following DaVita's earnings release on May 1, 2014, its shares gained 2.5% to close at $71.17 in the last trading session. The year-to-date return from the stock was 13.16%, much above the S&P 500's return of 4.29% and that of other players in the industry like Tenet Healthcare Corp. THC and Fresenius Medicare Care AG & Co. KGAA FMS with returns of 12.75% and -7.92% respectively, over the same period.

Over the past one year, DaVita has been successfully expanding its global footprint. In consistence with this, the company allied with eminent and popular entities in various regions. DaVita partnered with Arizona Integrated Physicians in Sep 2013, thereby foraying into Arizona. Again, in Nov 2013, the company strengthened its foothold in China by partnering with Shanghai Yangpu Antu Hospital. So far in 2014, DaVita has ventured into Saudi Arabia through a contract with the Kingdom of Saudi Arabia's Ministry of Health in Feb 2014. It also forayed into DeLand, FL and Malaysia in Apr 2014.

Additionally, DaVita has been upfront in enhancing its services. The company began offering hemodiafiltration treatment to certain patients in May 2014, which marked the first hemodiafiltration in the U.S. The company also started using Roche Technology to implement molecular diagnostic testing. This has helped it to become the first dialysis laboratory in the U.S. to test Hepatitis C (HCV) virus levels in the blood (viral load).

Such upgrades in its services, along with increase in global footprint, keep us optimistic about the stock's performance. The long-term growth rate of the stock is 9.40%.

Currently, DaVita caries a Zacks Rank #3 (Hold). However, among the better-ranked players in the same sector that look attractive at current levels, Almost Family Inc. AFAM is worth considering. This stock sports a Zacks Rank #1 (Strong Buy).

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