😎 Summer Sale Exclusive - Up to 50% off AI-powered stock picks by InvestingProCLAIM SALE

Evercore ISI upgrades Ventas stock to Outperform, citing attractive valuation

EditorEmilio Ghigini
Published 03/18/2024, 05:14 AM
© Reuters.

On Monday, Ventas Inc . (NYSE:VTR), a real estate investment trust specializing in healthcare properties, received an upgrade in its stock rating by Evercore ISI. The firm shifted its stance from "In Line" to "Outperform," and set a new price target of $50.00 for the company's shares.

The upgrade comes after a period of underperformance relative to the broader equity real estate investment trust (REIT) index and the healthcare sector. Over the past twelve months, Ventas has seen a total return of negative 5%, lagging behind these benchmarks by approximately 1200 basis points.

Despite this, the analyst pointed out that the company's valuation has become attractive, trading at nearly two standard deviations below its three-year average price to next twelve months (P/NTM) adjusted funds from operations (AFFO) multiple.

This valuation dip is not indicative of fundamental issues within Ventas, as the company has maintained solid credit ratings of BBB+/Baa1 and recently issued C$650 million in senior notes at 5.1%, maturing in 2029. The successful private placement underscores the high quality of Ventas's Canadian senior housing assets and the strength of its balance sheet.

The analyst further noted that Ventas's business model is sound, citing a cyclical recovery in the company's Senior Housing Operating Portfolio (SHOP), which is supported by data and forecasts from public company peers and third-party senior housing market databases. The company's Outpatient Medical (OM) and Research & Innovation (R&I) and triple net portfolios were also highlighted as stable components that contribute to Ventas's growth.

The analyst's projections for Ventas's AFFO align with the consensus and are based primarily on anticipated operating gains within the SHOP segment. This optimistic outlook for the company's core business, combined with the stability of its other business lines, has led to the positive reevaluation of Ventas's stock by Evercore ISI.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.