DaVita Healthcare Partners Inc. DVA is set to report fourth-quarter 2015 earnings on Feb 11, 2016. Last quarter, DaVita Healthcare had posted a 3.09% positive earnings surprise. Let's see how things are shaping up for this announcement.

Factors Affecting the Past Quarter

Earnings during the quarter might see suppressed results from the HealthCare Partner (“HCP”) business due to reimbursement cuts in Medicare Advantage and Medicaid. Also, significant infrastructure and next-generation investments might hurt the bottom line.

Also, the company continues to expect international losses in the fourth quarter. International losses of $15 million in the third quarter were unchanged from the second quarter.

The company’s share buyback activity will, however, give a boost to earnings.

For 2015, the company expects operating income of $1.870 billion to $1.915 billion. The company also projects income of $1.630 billion to $1.655 billion from Kidney Care and $240 million to $260 million from HCP.

Earnings Whispers

Our proven model does not conclusively show that DaVita is likely to beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP:  DaVita has an ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 96 cents per share.

Zacks Rank: DaVita carries a Zacks Rank #3, which increases the predictive power of ESP. However, a 0.00% ESP makes surprise prediction difficult.

We caution against Sell-rated stocks (Zacks Ranks #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some stocks in the healthcare space which you may want to consider, as our model shows that, they have the right combination of elements to post an earnings beat this quarter:  

Humana Inc. HUM has an Earnings ESP of +2.06% and a Zacks Rank #3. The company is expected to report fourth-quarter earnings results on Feb 10.

AMN Healthcare Services Inc. AHS has an Earnings ESP of +2.44% and a Zacks Rank #1. The company will release fourth-quarter earnings results on Feb 18.

Ariad Pharmaceuticals Inc. ARIA has an Earnings ESP of +14.3% and a Zacks Rank #2. The company is scheduled to release fourth-quarter results on Feb 23.

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ARIAD PHARMA (ARIA): Free Stock Analysis Report
 
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