DaVita Inc. (DVA): A Bull Case Theory

We came across a bullish thesis on DaVita Inc. on Value investing subreddit by AvocadoCorrect9725. In this article, we will summarize the bulls’ thesis on DVA. DaVita Inc.'s share was trading at $140.36 as of August 22^nd. DVA’s trailing and forward P/E were 13.83 and 12.89 respectively according to Yahoo Finance.

DaVita Inc. (DVA) is a leading provider of dialysis services in the U.S., serving an aging population with kidney diseases. The company operates within a duopoly domestically and is expanding internationally, offering dialysis both at clinics and at home. Its business is highly resilient, as patients require dialysis multiple times per week, creating a steady, predictable cash flow. DaVita’s pricing power and critical service provision make it a high-moat business, reflected in Berkshire Hathaway’s 44% ownership. Recent sales by Berkshire are primarily tied to a share repurchase agreement, which mandates that DaVita buy back shares when ownership exceeds 45%.

The major catalyst for DaVita over 2025-2026 is its aggressive share buyback program. The company has a strong history of repurchasing shares, with 90 million bought in 2022 and 71 million recently. In August 2025, the board authorized an additional $2 billion for buybacks, bringing the total to $4 billion, roughly 40% of market capitalization. At the current pace of 1.45 million shares repurchased per month, the program could conclude in approximately 1.6 years, potentially reducing the share count to 43 million by 2027. This reduction could boost EPS from $10.77 to $17.96, a 70% increase, without factoring in continued revenue growth, which has averaged 6% year-over-year.

Risks include the company’s leverage, although recent refinancing is expected to reduce interest expenses, and heavy reliance on Medicare and Medicaid, where policy changes could affect reimbursements. However, given the essential nature of dialysis, demand is unlikely to decline, making DaVita a resilient, long-term investment with substantial upside from share repurchases.

Previously we covered a bullish thesis on DaVita Inc. (DVA) by Isaac459 in February 2025, which highlighted the potential for improved organic volume growth driven by declining mortality rates among dialysis patients. The company's stock price has depreciated approximately by 18.35% since our coverage. The thesis still stands as DaVita remains a high-moat, critical healthcare provider. AvocadoCorrect9725 shares a similar perspective but emphasizes aggressive share buybacks as the key catalyst for future EPS growth.

DaVita Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 43 hedge fund portfolios held DVA at the end of the first quarter which was 46 in the previous quarter. While we acknowledge the potential of DVA as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.