DaVita upgraded to buy at UBS on growth prospects

Aug. 19, 2022 10:05 AM ETDaVita Inc. (DVA)AMGN, GNHAYBy: Jonathan Block, SA News Editor

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  • UBS has upgraded DaVita (NYSE:DVA) to buy from neutral citing its ability to deliver EPS growth in the coming years.
  • The firm upped its price target to $117 from $106 (~31% upside based on Thursday's close).
  • Analyst Andrew Mok said he is confident the company can deliver $200M-300M of OI growth in 2023 and is modeling ~$1.8B EBIT.
  • He added that the potential passage of the Restore Protections for Dialysis Patients Act could also benefit the company.
  • Mok noted that a contract with Amgen (AMGN) for Epogen (epoetin alfa), a drug given to patients with chronic kidney disease on dialysis, is set to expire leading to renegotiation that will likely lead to cost savings.
  • But he added DaVita is already piloting a program for its at-home dialysis patients to Vifor Pharma's (OTCPK:GNHAY) Mircera (methoxy polyethylene glycol-epoetin bets). Mok believes the company may transition to in-center patients in January 2023.
  • The switch to Mircera could lead to $140M in annual cost savings, according to Mok.
  • Seeking Alpha's Quant Rating views DaVita (DVA) as a hold with an "A" for profitability.

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