Analyst Note
| Julie Utterback, CFA |DaVita turned in strong third-quarter results, but shares traded lower after the market closed on management's trimmed 2021 outlook and caution on 2022, as excess mortality concerns accelerated in the quarter on the delta variant surge and labor costs rose. After trimming our expectations for 2021 a bit and 2022 significantly, including expected lobbying costs during the mid-term election year, we are keeping our $110 fair value estimate intact. Our fair value depends on business conditions normalizing in 2023 and beyond, and despite the near-term expected disruption, we continue to see significant intangible assets and cost advantages around DaVita's top-tier position in dialysis services, which informs our narrow moat rating.