Positive Earnings Report Bodes Well for Dialysis Provider

DaVita is being propped up by support from its 30-day moving average

May 20, 2020 at 2:40 PM
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Kidney dialysis provider DaVita Inc (NYSE:DVA) has been on a long-term climb on the charts, and following its mid-March pullback, has broken back above its year-to-date breakeven mark, as well as a trendline connecting lower highs since February. The shares are also seeing support at the 30-day moving average, following a positive earnings reaction on May 6. With this support in place, now is the perfect time for bulls to jump aboard DVA.

Daily DVA WKEND

 

There remains plenty of analyst pessimism surrounding the stock, with five of eight covering firms sporting a tepid "hold" recommendation. If this heightened pessimism were to unwind, it could mean an even larger surge for DaVita stock in the near future.

Shorts look to be in covering mode, with 5.5 million shares now sold short. This accounts for 4.6% of the stock’s total available float, or just over three days’ worth of pent-up buying power.

Lastly, the security’s Schaeffer’s Volatility Index (SVI) of 39% sits in the 25th percentile of its annual range, meaning options players are pricing in relatively low volatility expectations at the moment.

Subscribers to Schaeffer's Weekend Trader options recommendation service received this DVA commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

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