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What's in the Cards for DaVita (DVA) This Earnings Season?

Zacks Equity Research

DaVita Inc. DVA is scheduled to release second-quarter 2019 results on Aug 1, after the closing bell.

In the last reported quarter, the company delivered a negative earnings surprise of 4.2%. Also, it has an average negative surprise of 8% for the trailing four quarters.

Let’s take a look at how things are shaping up prior to this announcement.

Which Way Are Q2 Estimates Moving?

For the second quarter, the Zacks Consensus Estimate for the top line is pegged at $2.86 billion, indicating a decline of 1.1% from the year-ago quarter. The same for the bottom line is pinned at $1.07, suggesting a growth of 1.9% from the year-ago reported figure.

DaVita Inc. Price and EPS Surprise


DaVita Inc. Price and EPS Surprise
DaVita Inc. Price and EPS Surprise

DaVita Inc. price-eps-surprise | DaVita Inc. Quote

Factors to Influence Q2

As an operating division of DaVita, DaVita Kidney Care focuses on setting global standards for clinical, social and operational practices in kidney care. The company is expected to witness an increase in net dialysis and related lab patient service revenues in the to-be-reported quarter.

For investors’ notice, the company has divested the DaVita Medical Group unit to Optum for $4.3 billion. This is expected to further enhance DaVita’s focus on its core Kidney Care business. Notably, the Kidney Care wing is a significant contributor to the company’s top line.

That’s not all. The company recently released preliminary results for the second quarter, which reportedly cheered investors.

Notably, the company expects operating income within $460-$465 million for the quarter to be reported. The company expects calcimimetics to have contributed nearly $40 million to operating income in the second quarter. Additionally, the company’s U.S. dialysis and related lab services segment is anticipated to have significantly driven the top line.

Buoyed by these factors, the company issued a solid guidance for 2019. DaVita now expects adjusted operating income between $1.64 billion and $1.70 billion, mirroring a significant increase from the earlier projected range of $1.54 billion to $1.64 billion. (Read More: DaVita Announces Preliminary Q2 Results, View Upbeat)

What Our Quantitative Model Suggests

Per the proven Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

DaVita has a Zacks Rank #1 and an Earnings ESP of +15.58%, suggesting a beat this earnings season.

Please note that we caution against stocks with a Zacks Rank #4 (Sell) or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks Worth a Look

Here are a few other medical stocks worth considering as these also have the right combination of elements to post a beat this earnings season.

DENTSPLY SIRONA XRAY has an Earnings ESP of +6.95% and a Zacks Rank #1.

Allena Pharmaceuticals ALNA has an Earnings ESP of +7.55% and a Zacks Rank #2.

Becton, Dickinson and Company BDX has an Earnings ESP of +0.55% and a Zacks Rank #3.

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DaVita Inc. (DVA) : Free Stock Analysis Report
DENTSPLY SIRONA Inc. (XRAY) : Free Stock Analysis Report
Becton, Dickinson and Company (BDX) : Free Stock Analysis Report
Allena Pharmaceuticals, Inc. (ALNA) : Free Stock Analysis Report
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