Healthcare company DaVita Inc. (NYSE: DVA) recently revealed that it has acquired MedSleuth, a transplant software company that focuses on solving connectivity issues between transplant candidates, centers and physicians.
Following the news, shares of the company declined 3.8% to close at $111.85. However, the fall can be attributed to wider market concerns.
Strategic Impact
With MedSleuth’s deep network and latest software, DaVita aims at strengthening its position in the transplant market.
Further, the buyout will allow DaVita to make the process of evaluating candidates for transplant more efficient.
Management Commentary
The CEO of DaVita, Javier Rodriguez, said, “MedSleuth has built a powerful platform that can help increase patients’ access to transplantation. We’re looking forward to supporting the team to accelerate innovation and help streamline the transplant process for transplant candidates, transplant centers, physicians and care teams.”
Stock Rating
Recently, Truist Financial analyst David S Macdonald reiterated a Hold rating on the stock. The analyst, however, raised the price target from $114 to $125, which implies upside potential of 11.8% from current levels.
According to the analyst, the core fundamentals of the healthcare sector remain solid. He points out that “sound fundamentals, brisk core demand drivers, a relatively benign regulatory backdrop, and the ongoing move towards value-based care” can be beneficial for the sector. Further, he said, free cash flow generation strength and financial flexibility gives the companies in the sector headroom to pursue strategic acquisitions.
Consensus among analysts is a Hold based on 1 Buy and 3 Holds. The average DaVita price prediction of $128.50 implies upside potential of 14.9% from current levels. Shares have declined 5.3% over the past year.
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