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DaVita May Profit From Obamacare Boost: Pro

Wednesday, 19 Dec 2012 | 4:43 PM ET

U.S. companies like DaVita may be best positioned to benefit from changes in the health care market stemming from Obamacare, an analyst told CNBC on Wednesday.

With President Barack Obama's health care bill slated to take effect within the next year, DaVita's move toward serving broader swaths of the population may help it capitalize on moves toward managed care, Martin Brunninger, head of Medtech at Nomura Securities, told "Squawk Box Europe."

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"We have 70 percent of the dialysis care market dominated by two big players, so we have efficiency gains and there's not much more earnings power in the U.S. sector," said Brunninger.

"However moving a bit away from dialysis care, DaVita has diversified away and they have a broader approach now in saving managed dollars for broader patient populations," he added. "I think that is the future."

Last week, Nomura raised DaVita to a "buy" from "neutral," and hiked its price target to $120.

Beginning in 2014, the Obama administration is preparing for an estimated 30 million people to take advantage of its signature health care law. Health care companies are preparing to absorb the countless billions of dollars that will be spent on insurance for lower-income patients.

DaVita, Brunninger said, may become part of the more bullish outlook for health care stocks.

"It's all about changing the structure in the U.S. health care system," he said, adding that most health care systems around the world were moving toward lower spending on an increased population.

"It doesn't necessarily mean the quality needs to be diminished. But it's just about management and where the profits are going," he added.

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Disclosure: Martin Brunninger owns no stock in Davita, nor does Nomura. The firm has no investment banking or business conflicts with the company.


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