Argus Analysts See Strong Opportunities For Ventas, Would Buy On A Pullback

Ventas, Inc. VTR shares have performed strongly over the past year and appear fully valued at present. However, Argus’ Jacob Kilstein prefers to wait for a non-fundamental pullback to become more constructive on the stock.

Kilstein initiated coverage of the company with a Hold rating.

Stock Outperformance

“We believe that Ventas has strong opportunities in the $1 trillion senior housing and healthcare real estate market, driven by favorable demographic trends, increased healthcare spending, and growing demand for low-cost medical outpatient facilities,” the analyst mentioned.

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Over the past three months, the stock has outperformed the S&P 500, appreciating 14 percent, as compared to a 5 percent rise in the broad market.

The stock has also outperformed over the past year, gaining 11 percent, as compared to the 3 percent gain for the market.

Recent Acquisitions, Investments

Ventas acquired 23 medical and life science properties from Blackstone Group LP BX on July 5, for $1.5 billion.

Kilstein expects the deal to boost Ventas’ 2017 FFO by $0.07–$0.09 per share.

“During the first quarter, Ventas invested $154 million in new projects, including $140 million in life science properties in Massachusetts and California. The company also funded $37 million of development and redevelopment projects within its $500 million pipeline,” the analyst said.

The company issued 1.6 million in stock, which generated $101 million. The proceeds were used to help fund the various investments during the quarter.

Ventas also sold seven properties for a total profit of $69 million.

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