William Blair Likes Brookdale Senior Living Long Term

William Blair & Co rates shares of Brookdale Senior Living Inc.

at Outperform after the company reported quarterly results. In the report William Blair writes, "Turning to the stock, we continue to view Brookdale shares as a compelling long-term investment opportunity and maintain our Outperform rating. Our thesis is that the company is a clear leader in a large and attractive industry and that a long-term supply-demand imbalance in the seniors housing space will continue to drive higher occupancy rates, solid pricing, and strong cash flow generation over the coming years. That stated, we acknowledge that BKD’s near-term performance will likely be impacted by macroeconomic trends—particularly consumer confidence and the health of the U.S. housing market, both of which have worsened over the last several months (with consumer confidence dropping 12 points, or nearly 20%, since May, and new mortgage applications plummeting since the expiration of the homebuyers’ tax credit on May 1, 2010). Nevertheless, we continue to believe the worst is over for the industry, as evidenced by Brookdale’s recent performance, as well as recent results (and commentary) from Five Star Quality Care (FVE $3.70), which recently experienced its first year-over-year increase in independent and assisted living occupancy in four years and commented (on last week’s earnings call) that traffic in its buildings continues to increase in the third quarter." Shares of Brookdale Senior Living are jumping this morning, up 86 cents to $15.25.