DaVita (DVA): Reassessing Valuation After Recent Share Price Pullback

DaVita (DVA) has quietly slipped over the past month, extending a tougher stretch this year, and that kind of pullback naturally raises the question: has the market become too pessimistic here?

See our latest analysis for DaVita.

The recent slide fits into a wider reset, with the 1-year total shareholder return down sharply even after a strong three-year total shareholder return. This suggests momentum has clearly cooled as investors reassess growth and reimbursement risk at a share price of $114.41.

If DaVita’s moves have you rethinking your positioning in healthcare, this could be a good moment to explore other quality names via healthcare stocks.

With earnings still growing and the stock trading at a hefty discount to analyst targets, investors face a key question: Is DaVita undervalued after this pullback, or is the market simply pricing in slower future growth?

Most Popular Narrative Narrative: 20.8% Undervalued

With DaVita last closing at $114.41 versus a narrative fair value of $144.50, the valuation case leans positive while hinging on specific financial and clinical assumptions.

The aging population and rising rates of diabetes and hypertension continue to fuel steady underlying demand for dialysis, and management reaffirmed their belief in a return to 2% annual treatment growth over time, suggesting upside to revenue as volumes recover from temporary disruptions.

Read the complete narrative.

Curious how modest growth expectations, stable margins, and shrinking share count can still justify a higher valuation than today. Want to see the full playbook behind that gap.

Result: Fair Value of $144.50 (UNDERVALUED)

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

However, persistently elevated mortality and ongoing reimbursement pressures could blunt treatment growth and margins and challenge the case for a sustained re-rating.

Find out about the key risks to this DaVita narrative.

Build Your Own DaVita Narrative

If you see the story differently or want to dig into the numbers yourself, you can build a personalized view in just 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?

Use the Simply Wall Street Screener now to uncover focused opportunities that match your strategy, or risk watching others spot these ideas before you do.

• Capture potential mispricings by scanning these 905 undervalued stocks based on cash flows that may be trading below their intrinsic value based on future cash flows.
• Position for the next wave of innovation by reviewing these 24 AI penny stocks tapping into advances in artificial intelligence and automation.
• Strengthen your income stream by assessing these 10 dividend stocks with yields > 3% that balance yield with underlying business quality and resilience.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com