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A Look At DaVita (DVA) Valuation As Medicare Rules And Value-Based Kidney Care Progress

Simply Wall St · 5d ago

DaVita (DVA) is back on investors’ radar after recent Medicare payment rules for end-stage renal disease aligned with expectations, paired with continued growth in risk-bearing and value-based kidney care contracts.

See our latest analysis for DaVita.

The recent Medicare decision and DaVita’s push into value-based kidney care arrive after a softer patch. A 90-day share price return of a 12.61% decline and a 1-year total shareholder return of a 24.43% loss contrast with a 45.48% gain over three years, which suggests long term holders have still seen meaningful value even as near term momentum has cooled.

If this kind of policy driven story has your attention, it could be a good moment to widen your watchlist with healthcare stocks that sit at the intersection of care delivery and long term chronic disease trends.

With DaVita posting US$13.32b in revenue, US$771.92m in net income and trading at US$114.51, plus some implied upside to analyst targets, you have to ask: is the current price a bargain, or is it already reflecting expectations for future growth?

Most Popular Narrative: 20.8% Undervalued

With DaVita last closing at US$114.51 against a narrative fair value of US$144.50, the current setup hinges on how earnings and margins evolve from here.

The analysts have a consensus price target of $153.5 for DaVita based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $186.0, and the most bearish reporting a price target of just $137.0.

Read the complete narrative.

Curious what earnings profile and margin shape are baked into that valuation gap? The narrative leans on measured growth, steady profitability, and a future P/E reset that contrasts sharply with the wider US Healthcare group.

Result: Fair Value of $144.50 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, the narrative depends on patient mortality normalizing and reimbursement keeping pace with costs, and setbacks on either front could quickly erode the perceived valuation gap.

Find out about the key risks to this DaVita narrative.

Build Your Own DaVita Narrative

If you see the story differently or want to test your own assumptions against the numbers, you can build and stress test your version in minutes. Do it your way

A great starting point for your DaVita research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

Looking for more investment ideas?

If DaVita has sparked your interest, do not stop here. Broaden your opportunity set by checking other themes where fundamentals, pricing and long term stories intersect.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.