NEW YORK (TheStreet) -- Shares of DaVita HealthCare Partners (DVA) - Get DaVita Inc. Report are down 1.72% to $72.96 after Keybanc (KEY) - Get KeyCorp (KEY) Report downgraded the kidney care company to "hold" from "buy" due to lack of growth in the dialysis business.
The downgrade was triggered by limited growth in the dialysis business and uncertainty around the growth and capital development initiatives for the company's HealthCare Partners business, a health care and delivery management service for the benefit of patients and physicians, said analyst Jason Gurda.
TheStreet Ratings team rates DAVITA HEALTHCARE PARTNERS as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate DAVITA HEALTHCARE PARTNERS (DVA) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to its closing price of one year ago, DVA's share price has jumped by 33.41%, exceeding the performance of the broader market during that same time frame. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
- Despite its growing revenue, the company underperformed as compared with the industry average of 20.4%. Since the same quarter one year prior, revenues rose by 10.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- DAVITA HEALTHCARE PARTNERS's earnings per share declined by 42.6% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, DAVITA HEALTHCARE PARTNERS increased its bottom line by earning $2.90 versus $2.73 in the prior year. This year, the market expects an improvement in earnings ($3.63 versus $2.90).
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Health Care Providers & Services industry and the overall market on the basis of return on equity, DAVITA HEALTHCARE PARTNERS has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- Currently the debt-to-equity ratio of 1.84 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Even though the debt-to-equity ratio is weak, DVA's quick ratio is somewhat strong at 1.34, demonstrating the ability to handle short-term liquidity needs.
- You can view the full analysis from the report here: DVA Ratings Report
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