With a sudden -1.2% drop to $112.92, DaVita has Wall Street wondering if its shares will keep moving past its target price of $110.67. With an average rating of hold, and analysts assigning target prices from 90.0 to 120.0 dollars per share, investors will be betting heavily on the Misc Health and Biotechnology Services stock's next move.
To understand the market's outlook on the stock, we can look at DaVita's short interest: the proportion of the share float that is tied to short positions. Behind each short position is an investor who believes that the stock will decline in the future. Here, the stock's short interest is 9.2% which means the outlook is split.
Short selling involves borrowing shares and then selling them at current market prices. In the successful version of the strategy, the shares are purchased at a lower price at some time in the future. The investor then returns the shares to the lender, and keeps the profit made on the sell/buy transaction.
A possible indicator of market sentiment on a stock (besides its share price, of course) is the portion of institutional investors that make up its shareholders. Institutions such as banks, hedge funds, and wealth managers deploy significant resources towards identifying good investments. If they are invested heavily in a given company's stock, it could mean it's a good investment. Or it could mean the company is being targeted by a takeover attempt.
For what it's worth, institutions own 49.6% of DaVita's shares, which is an average amount. It means that many institutions are invested, but not to the extent that they would be in a stock such as Apple or Amazon, whose institutional ownership rates hover around 60%. Bear in mind that institutional ownership is just one piece of the puzzle in determining market sentiment, and you should not consider this factor alone in making an investment decision.
Overall, there is mixed market sentiment towards DaVita because of an analyst consensus of little upside potential, a hold rating, an above average percentage of its shares sold short, and only a small number of institutional investors. Investors should not base their decisions on market sentiment only, they should also be aware of a stock's fundamentals before committing.
At a glance, here are some essential statistics you may want to know about DVA:
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It has trailing 12 month earnings per share (EPS) of $6.44 per share
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DaVita has a trailing 12 month Price to Earnings (P/E) ratio of 17.5 while the S&P 500 average is 15.97
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The company has a Price to Book (P/B) ratio of 8.6 in contrast to the S&P 500's average ratio of 2.95
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DaVita is a Health Care company, and the sector average P/E and P/B ratios are 30.21 and 4.08 respectively
