DaVita Inc. (NYSE:DVA) Analysts Are Pretty Bullish On The Stock After Recent Results

Investors in DaVita Inc. (NYSE:DVA) had a good week, as its shares rose 8.2% to close at US$120 following the release of its full-year results. Results were roughly in line with estimates, with revenues of US$12b and statutory earnings per share of US$7.42. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for DaVita

Taking into account the latest results, the consensus forecast from DaVita's eight analysts is for revenues of US$12.6b in 2024. This reflects an okay 3.5% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to rise 9.5% to US$8.64. In the lead-up to this report, the analysts had been modelling revenues of US$12.4b and earnings per share (EPS) of US$8.36 in 2024. So the consensus seems to have become somewhat more optimistic on DaVita's earnings potential following these results.

The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 12% to US$121. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values DaVita at US$145 per share, while the most bearish prices it at US$99.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting DaVita's growth to accelerate, with the forecast 3.5% annualised growth to the end of 2024 ranking favourably alongside historical growth of 1.0% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.4% per year. It seems obvious that, while the future growth outlook is brighter than the recent past, DaVita is expected to grow slower than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards DaVita following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for DaVita going out to 2026, and you can see them free on our platform here..

We don't want to rain on the parade too much, but we did also find 1 warning sign for DaVita that you need to be mindful of.

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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.