UPDATE: Bank of America Downgrades Brookdale Senior Living to Neutral
Bank of America has downgraded Brookdale Senior Living (NYSE: BKD) and has downgraded the company from Buy to Neutral.
In the report, Bank of America writes, "We are downgrading BKD to Neutral from Buy as a projected decline in housing prices over the next year combined with a tax headwind beginning in 2014 mean that it will take more time for the company's cash flow to show the upward trajectory that we expect from an economic rebound. We remain bullish on the senior housing industry longer-term given a favorable supply and demand imbalance, but we prefer ESC in the near term since it provides more needs-based services and does not face a tax headwind in 2014. Our $20 Price Objective represents 10.5x our 2012 EBITDAR estimate, implying a 7% discount to its one year average valuation given the expected tax headwind."
Bank of America maintains its $20 price objective on Brookdale Senior Living, which is currently trading down $0.38 from Friday's $17.39 closing price.
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