Investors should scoop up shares of Davita as demand for the company’s treatments picks up, according to Deutsche Bank. The bank upgraded the dialysis service provider to buy from hold. Is also raised its price target to $220 from $126, implying 40% upside from Tuesday’s close. Davita reported better-than-expected earnings for the first quarter on Tuesday, sending shares nearly 6% higher in off-hours trading. DVA 5D mountain DVA rises “The two shining stars of the quarter were: (1) Revenue per treatment; (2) Treatment growth,” analyst Pito Chickering said Tuesday in a note to clients. “At this point, we are unable to sit on the sidelines.” Treatments came in 10 basis points above analysts’ consensus estimate for the first quarter, according to Deutsche Bank. The company also said it expects demand for treatments to increase by between 20 and 50 basis points for the current year. Davita’s revenue per treatment was $417.59 for the period, topping the Street’s expectation of $8.30. That marks a 4.4% increase in treatment revenue on a year-over-year basis. “There are still a lot of variables like new starts/ mortality which can impact these numbers. Bears are playing for treatment growth structurally impacted by both SGLT2 inhibitors plus GLP-1 impacts, but with treatment growth moving up for the first time in years, we believe these headwinds simply aren’t coming in as bears hoped for,” Chickering wrote. Deutsche Bank’s call goes against consensus on the Street. Of the 10 analysts covering DaVita, 6 have a hold on the stock, LSEG data shows. Shares have risen 38% in the year to date.
