On Friday, BMO Capital Markets maintained its optimistic outlook on Welltower Inc. (NYSE: NYSE:WELL), reiterating an Outperform rating and a $148.00 price target for the real estate investment trust. With a market capitalization of $25.32 billion and strong revenue growth of 10% year-over-year, Welltower stands as a prominent player in the healthcare REIT sector. The firm highlighted Welltower as its top pick in the sector, replacing another high-performing company, citing several reasons for its preference.
The analyst from BMO Capital Markets expressed confidence in Welltower's prospects, noting that the company is expected to continue its strong performance in the senior housing operating portfolio (SHOP) segment. According to the firm's estimates, Welltower's SHOP same-store net operating income (SSNOI) is projected to grow by 18.8% year-over-year in 2025, which is slightly below the consensus estimate of 19.1%.
According to InvestingPro data, the company is expected to maintain its growth trajectory with projected revenue growth of 8% in FY2024.Want deeper insights? InvestingPro subscribers have access to exclusive analysis and comprehensive financial metrics for over 1,400 stocks, including detailed Pro Research Reports.
The decision to favor Welltower over its peer is based on a cautious outlook for the other company's 2025 funds from operations (FFO) guidance. The analyst pointed out that growth in the senior housing sector might be limited due to high occupancy rates in Canada and potential challenges in pricing power within independent living communities, which make up a significant portion of the U.S. units.
Welltower's strengths were identified as continued leadership in SHOP SSNOI growth and an unmatched access to capital at a lower cost. These factors are expected to provide the company with a competitive edge in the market.
According to InvestingPro data, the company maintains a healthy current ratio of 1.22 and offers a steady dividend yield of 3%. However, the analyst also acknowledged that Welltower faces risks, including its elevated valuation and increased competition for investments in the sector.
The reiterated price target of $148.00 reflects the firm's assessment of Welltower's value and growth potential. With analyst price targets ranging from $55 to $81 and a strong Buy consensus rating of 1.8, the market maintains a positive outlook on the stock. The analyst's commentary underscores BMO Capital Markets' belief in Welltower's ability to outperform in the real estate investment trust space, particularly within the senior housing segment. The company's next earnings report is scheduled for February 13, 2025.
In other recent news, Ventas Inc (NYSE:VTR). has been demonstrating robust financial performance, particularly in its third-quarter 2024 results. The company reported a 7% year-over-year increase in normalized funds from operations (FFO) per share, reaching $0.80. This growth marks Ventas's ninth consecutive quarter of double-digit net operating income (NOI) growth, with a notable 15% cash NOI growth in its senior housing operating portfolio (SHOP).
Ventas has also launched a public offering of 10.6 million shares of common stock as part of a forward sale agreement, with Wells Fargo (NYSE:WFC) Securities serving as the underwriter. The proceeds from this agreement are planned to be used for general corporate purposes, including funding acquisitions, investments, and repaying existing debt.
RBC Capital Markets has adjusted its outlook on Ventas, raising its price target from $63.00 to $70.00 and maintaining an Outperform rating. RBC Capital has expressed confidence in Ventas's potential to leverage the strong market conditions for seniors housing. However, the firm is also monitoring potential changes to the National Institutes of Health (NIH) budget, which could affect Ventas's Research & Innovation (R&I) platform.
Ventas has made significant investments in senior housing across 43 communities this year, totaling $1.7 billion. The company aims to exceed previous occupancy peaks by leveraging favorable supply-demand dynamics in the senior housing market. These are the recent developments in the company's performance and strategy.
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