The firm upgraded shares to buy and raised its price target to a Street-high of $142, citing an upcoming inflection in treatment growth.
Kidney dialysis services company DaVita could soon see a turning point in treatment growth, according to UBS. Analyst Andrew Mok upgraded shares to buy from neutral. He also increased his price target to a Street-high of $142 per share, implying 30.5% upside from Friday's close. "Combined with better pricing and a lower cost structure , we see numerous tailwinds that support our Street-high earnings estimates and contrarian Buy rating," Mok said in a Monday note.
He expects growth to meaningfully accelerate in the fourth quarter and in 2024. "When contemplating a lower fixed cost structure, the accelerating growth provides a favorable backdrop for positive operating leverage and sustainable 16%+ US Dialysis EBIT margins," Mok said. According to Mok, DaVita has outperformed initial earnings guidance in the first half of 2023 owing to multiple tailwinds.
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