Goldman Sachs Initiates Buy Rating on DaVita Inc. (DVA)

Goldman Sachs is out with a research report this morning, where it initiates a Buy rating on DaVita Inc. DVA; it has a $90 price target on the stock. The Goldman Sachs analysts believe DVA is an attractive secular growth story, which is coupled with a near-term catalyst for sustainable margin improvement. The analsyts view the stable 4% annual dialysis treatment volume growth as particularly attractive in the midst of an economy-driven multi-year slowdown in healthcare volumes industry-wide. Furthermore, unlike peers struggling to stabilize margins as revenues remain under pressure, DaVita has the opportunity to trim costs. As for valuation, the analysts remarked, “Our 6-month price target reflects 9x EV/EBITDA (40%), 17x P/E (40%), and $92 DCF (20%). Superior growth and profitability warrant a premium, in our view; our target multiples are modestly above historical medians.”