DaVita (DVA): Reassessing Valuation After Earnings Miss, Rising Costs and Earlier Ransomware Fallout
DaVita (DVA) just handed investors a rough quarterly update, with earnings missing expectations as higher care and administrative costs, softer dialysis volumes, and lingering ransomware fallout weighed on results and sentiment.
See our latest analysis for DaVita.
Despite the latest miss and the earlier ransomware hit, DaVita’s 1 year total shareholder return of negative 20.28 percent and year to date share price return of negative 19.87 percent suggest momentum has clearly faded, even though the 3 year total shareholder return of 66.11 percent shows that long term holders are still meaningfully ahead.
If this earnings wobble has you rethinking healthcare exposure, it could be a good moment to explore other specialised operators across healthcare stocks for fresh ideas and different risk profiles.
With shares now trading at a sizable discount to analyst targets and a rich three year run still in the rearview mirror, investors must decide whether DaVita is quietly undervalued or if the market is already discounting future growth.
Most Popular Narrative Narrative: 16.9% Undervalued
DaVita’s most widely followed narrative sees fair value clearly above the last close of $120.05, framing the earnings miss as a setback rather than a reset.
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 $137.0.
Curious how steady mid single digit growth, firmer margins, and a lower future earnings multiple can still justify a premium valuation path for DaVita? The narrative breaks down the revenue build, the earnings climb, and the share count assumptions driving its upside case, then stress tests them against a higher discount rate. Want to see which levers matter most in that fair value calculation, and how much optimism is already baked in?
Result: Fair Value of $144.50 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, persistently high patient mortality and ongoing reimbursement pressure could undermine those growth assumptions and force investors to rethink DaVita’s valuation upside.
Find out about the key risks to this DaVita narrative.
Build Your Own DaVita Narrative
If you see DaVita’s story differently, or would rather dig into the numbers yourself, you can spin up a custom view 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.
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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.
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