The stock of dialysis provider DaVita is on the rise after the company reported fourth-quarter financial results that exceeded Wall Street's expectations.
Impressive Performance and Increased Stock Price
DaVita's stock surged by 10% to reach $124.39, marking the highest closing price since September 2021. This increase also represents the largest percentage gain since May 9, 2023, when strong quarterly results drove the stock price up significantly.
Outperforming the S&P 500
DaVita has been one of the top-performing stocks in the S&P 500 recently. Over the past 12 months, the company's stock has gained an impressive 50%, more than doubling the 20% rise in the index.
A Positive Outlook for 2024
According to David MacDonald, a Truist Securities analyst, DaVita had a strong finish to 2023 and provided even better guidance for 2024. MacDonald increased his price target for DaVita stock from $120 to $130 while maintaining a Hold rating. He highlighted that the fourth-quarter financials and full-year outlook exceeded expectations, driven by anticipated volume improvements and successful cost controls.
Strong Fourth-Quarter Results
In its earnings report, DaVita revealed that its fourth-quarter earnings per share were $1.87, beating Wall Street estimates of $1.63 and showing an increase from $1.11 in the previous year. Furthermore, the company's revenue for the quarter reached $3.15 billion, surpassing the consensus forecast of $3 billion and representing growth compared to the $2.92 billion reported a year ago.
Encouraging Full-Year Outlook
For the entire year, DaVita anticipates earnings per share ranging from $8.70 to $9.80. The midpoint of this range, $9.25, exceeds the $8.82 estimate put forth by analysts.
CEO's Optimistic Statement
DaVita CEO Javier Rodriguez expressed his confidence in the company's prospects for 2024. Despite the challenges posed by the Covid-19 pandemic, Rodriguez stated that DaVita is entering the year with more certainty and positive momentum.
Analyst Recommendations Vary
While BofA Securities analyst Kevin Fischbeck increased his price target for DaVita stock to $126 from $115, he maintained an Underweight rating on the stock. Fischbeck stated that he is waiting for further evidence of volume improvement before reassessing his rating.
Recovery from Pandemic Impact
DaVita's treatment volumes suffered due to the impact of Covid-19. However, CEO Rodriguez noted that as Covid-19 cases have decreased and mortality rates have declined, patient census has increased for the first time since the start of the pandemic. Volumes have remained relatively stable year-over-year and are within the company's projected range.
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