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UBS Calls DaVita (NYSE:DVA) Sell-Off “Big Overreaction”
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UBS Calls DaVita (NYSE:DVA) Sell-Off “Big Overreaction”

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Shares of DaVita and other kidney dialysis providers dropped on Wednesday after Novo Nordisk gave updates on its kidney drug trials.

DaVita (NYSE:DVA) is on the end of a massive market exit following an announcement from Novo Nordisk (NYSE:NVO) that its GLP-1 drug semaglutide was effective in a kidney trial. Analysts at investment firm UBS said the sell-off was a “big overreaction.”

“While this development suggests GLP-1s may slow the progression of chronic kidney disease, it’s worth reviewing the sample of the study to put the news into perspective,” UBS said in a note released early Wednesday. “The study’s inclusion criteria significantly narrows scope, limits extrapolation.”

Additionally, according to UBS, the use of GLP-1 has been the “primary driver of weakness” in DaVita shares, which have dropped by almost 19% since August 8. However, Novo Nordisk mentioned that it would stop the study early despite the trial’s successes. 

However, DaVita isn’t the only stock being sold off. Fellow kidney dialysis providers, such as Fresenius Medical Care (NYSE:FMS) and Baxter International (NYSE:BAX), have also seen steep declines in their share prices, dropping 18.95% and 10.61%, respectively. 

Is DaVita a Good Stock to Buy?

Turning to Wall Street, analysts have a Moderate Buy consensus rating on DVA stock based on one Buy, two Holds, and zero Sells assigned in the past three months, as indicated by the graphic above. Furthermore, the average DVA price target of $119.33 per share implies a 59.94% upside potential.

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