On Thursday, Morgan Stanley adjusted its outlook on Welltower, Inc. (NYSE: NYSE:WELL), a real estate investment trust (REIT) specializing in healthcare infrastructure. The firm increased its price target on the stock to $102 from the previous $90 while maintaining an Overweight rating.
The revision reflects Morgan Stanley's growing confidence in Welltower's financial performance, particularly in its ability to expand funds from operations (FFO) per share. The analyst predicts that Welltower will achieve a growth rate of over 10% in both 2024 and 2025, outpacing the average growth rate of 2-3% for the REIT sector.
The optimism is partly based on Welltower's potential for organic growth, estimated at approximately 10% in 2024 and around 7% in 2025. This growth is expected to contribute significantly to the company's financial metrics.
In addition to organic expansion, Morgan Stanley anticipates that Welltower will benefit from substantial acquisition activities. The firm projects that Welltower could engage in $2 to $3 billion worth of acquisitions annually, further bolstering its market position and financial standing.
The analyst also expects Welltower to maintain a considerable premium in its market valuation compared to its peers. The forecast suggests that Welltower's shares could trade at a multiple that is over 40% higher than the average for REITs, with a multiple of 23 times versus 16.5 times for the sector.
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