Davita (DVA) is an operator of kidney dialysis centers. Having been a wiley veteran of dialysis (no fun) before I received my kidney transplant in 2005, one of the things I noticed is that dialysis centers relish giving patients their shot of the Epogen class of medications for anemia. Why? About 20% of the revenue for for-profit dialysis businesses, according to a recent report in the Wall Street Journal, come from administering these $1,000+ anti anemia shots to dialysis patients. I was given potent doses every week before my transplant. While the FDA is assessing Epogen risks for cancer patients, there's no doubt imho that the FDA action casts a cloud over the medication's heavy use in kidney failure patients as well.Incidentally, On May 1st, Piper downgraded shares of DVA to Underperform from Market Perform citing disappointing 2008 operating income guidance from the company. Piper has a $50 target on DVA. With relative strength fading back below the 50 mark, it wouldn't be a surprise to see DVA retest the $50/shr area again.
Disclosure: no position in DVA, but giving a short serious thought.
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