Evercore ISI Upgrades Ventas Stock to Outperform, Citing Attractive Valuation By Investing.com

© Reuters.

On Monday, Sales Co., Ltd. . (NYSE:), a real estate investment trust specializing in healthcare assets, has received an upgrade to its stock rating from Evercore ISI. The company switched its stance from “In Line” to “Outperform” and set a new price target of $50.00 for the company’s stock.

The upgrade comes after a period of underperformance compared to the broader equity real estate investment trust (REIT) index and the healthcare sector. Over the past 12 months, Ventas has delivered a total return of negative 5%, lagging its benchmark by about 1200 basis points.

Nonetheless, the analyst noted that the company’s valuation has become attractive, with the stock trading nearly two standard deviations below its three-year average price for the next 12 months (P/NTM) adjusted funds from operations (AFFO) multiple.

This downgrade is not indicative of a fundamental problem for Ventas, as the company maintains a solid credit rating of BBB+/Baa1 and recently issued C$650 million in 5.1% senior notes due 2029. The successful private placement highlights Ventas’ high quality. The strength of Ventas’ Canadian senior housing assets and balance sheet.

The analyst also noted that Ventas’ business model is sound, citing the cyclical recovery of 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 Healthcare (OM), Research and Innovation (R&I) and triple net portfolios were also highlighted as stable components contributing to Ventas’ growth.

Analyst forecasts for Ventas’ AFFO are consistent with consensus and are based primarily on expected operating profit within the SHOP segment. This optimistic outlook for the company’s core business, combined with the stability of its other business segments, has resulted in Evercore ISI rerating Ventas stock positively.

This article was sponsored by AI and reviewed by an editor. Please see our T&Cs for more details.