Ventas, Welltower Have New Growth in Senior Housing Portfolios: Analyst Says What's Next

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With senior housing generating sequential growth, the performance of healthcare real estate investment trusts (REITs) has been in focus.

There is a “large valuation spread” between Ventas, Inc. VTR and Welltower Inc WELL, while both companies are moving into “new growth territory with their senior housing portfolios,” according to Wedbush.

The Ventas, Welltower Analyst: Richard Anderson upgraded the rating for Ventas from Neutral to Outperform, while raising the price target from $44 to $51. Anderson is keeping Welltower at Neutral while raising the price target from $83 to $90.

The Ventas, Welltower Thesis: With progress in senior housing, growth in the companies' same-store net operating income (NOI) is going “from the teens to the twenties — a theme we expect to continue in 2024,” Anderson said in the upgrade note.

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During the third quarter of 2023, “both VTR and WELL produced over 100bps of sequential occupancy increases, which is pushing up margins and overall NOI growth a few rungs — VTR and WELL targeting 18% and 25%, respectively, for 2023,” the analyst wrote.

“The stock performance differential has been staggeringly in the favor of WELL (+34% vs. -1%, YTD),” Anderson stated. “But VTR showed us determination during 3Q23 with quick action seemingly putting back on its growth track,” he added.

VTR, WELL Price Action: Shares of Ventas had declined by 1.63% to $43.56; Welltower is down 2.25% at $86.16 at the time of publication Tuesday.

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