Piper Jaffray Reiterates Underweight on DaVita Inc. (DVA)

Piper Jaffray is out with a research report this morning, where it reiterates its Underweight rating onDaVita Inc. DVA; it has a $64.00 price target on the stock. The PJ analysts cited the Department of Veterans Affairs announcement that effective February 16, 2011, payments to non-VA providers for dialysis services will be based on Medicare's standard payment rates. This change was originally proposed earlier this year, though DVA announced it had reached certain agreements with the VA in its Q3 conference call that were less negative than the original proposal to pay the same rates as Medicare. The anaslyts are not entirely clear what the 2011 impact to DVA may be given language regarding "existing contracts" in the press release and no comment from DVA management. As for valuation, the analysts remarked, “Maintain Underweight with a $64 price target, [which is based off of] ~15x our FY11 EPS estimate of $4.33.”