Senior Housing Sector Is Reviving, Analyst Forecasts Growth For National Health Investors

BMO Capital Markets analyst Juan C. Sanabria upgraded National Health Investors, Inc. NHI from Market Perform to Outperform, maintaining the price forecast of $67.

Sanabria sees the potential for multiple expansions for the company, with upside to earnings driven primarily by SHOP and acquisitions.

Acquisitions also represent an opportunity with $150 million of debt firepower, given National Health Investors’ low leverage (4.4X net debt/EBITDA).

The analyst keeps a more constructive stance on the company’s SHOP portfolio given the recent strong 4Q23 occupancy and a solid start to ’24 despite typical seasonal trends.

Sanabria forecasts FY24 SHOP same-store net operating income growth of +30% y/y (guidance 25-30%), above peer’s guidance.

The midpoint of the company’s SSNOI guidance conservatively implies only +1.8% growth off fourth quarter 2023 annualized levels, the analyst adds.

After a quiet 2023, Sanabria sees acquisitions picking up amidst financial distress, which aren’t assumed in guidance. 

Overall, the company has a conservative balance sheet, an expanding acquisition opportunity set and a solid management team with an operational background.

The analyst writes that senior housing tenant issues have been addressed, major SNF tenants remain well-positioned, while SHOP has finally turned the corner and risks are fading.

Price Action: NHI shares are trading higher by 0.74% to $59.44 on the last check Tuesday. 

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