Despite the fact that Davita has appreciated a lot over the past one year, several analysts remain bullish on the stock. The consensus price target of $128.83 indicates a possible upside of about 5% from the current levels. Jaffray has a overweight rating with a price target of $135, Deutsche Bank has a PT of $136.00, Zacks $133.00 and Sanford C. Bernstein $131.00. The reason for the optimism stems from the good fundamental performance of the company over the years. The company had beaten analyst estimates for revenues and net income in the last quarter. The EPS came in at $1.84 compared to the estimate of $.180 by Thomson Reuters. The revenues had increased from $1.84 billion to $2.82 billion (~53% rise). That had led to a huge uptick in the stock, and it had subsequently touched its all time high of ~$131. EPS for 2013 is estimated at $7.52. The forward P/E of 15.53 (ttm P/E of ~29) also indicates good growth expectations over the next two years. It has rewarded the investors with great returns already, and the stock has appreciated by 30% on a 52 week basis. Key to further growth in the stock is improvement in fundamentals. Furthermore, improvement in company's services and offerings will also be an important factor in improving growth. Innovations are common in related fields, and a small company PLC Systems (PLCSF) has recently obtained several US and European patents for its proprietary product RenalGuard useful in Contrast Induced Nephropathy (CIN). DVA has to remain open to innovations in the dialysis services happening around the world. The full year financial impact of recent acquisition of HCP will be visible in 2013. The debt on books has increased substantially during the last year, and that will be an area of concern going forward. Interest payments may put pressure on the margins.
