A new year often brings new hope for the stock market, and after the terrible performance of real estate investment trusts (REITs) in 2022, it’s refreshing to see analysts coming out with improved forecasts for the same REITs that were downgraded so heavily last year.
Healthcare is one area of the overall market often cited as being recession resistant, and with fears of a 2023 recession pervading the market, several analysts are turning their attention to this sector in a positive way.
Take a look at three healthcare REITs that have received analyst upgrades within the past month, have performed quite well year-to-date and could be poised for a much improved 2023:
Welltower Inc. WELL is a Toledo, Ohio-based healthcare REIT that owns 1,687 facilities that provide senior housing, post-acute healthcare and outpatient health systems across the U.S., Canada and the U.K.
In November, Welltower announced it had initiated a master lease with Integra Health for 147 skilled nursing properties that Integra Health would sublease to 15 regional operators.
On Jan. 9, Raymond James analyst Jonathan Hughes upgraded Welltower from Outperform to Strong Buy, while raising his price target from $72 to $82. From its most recent closing price of $72.10, that represents a potential increase of 13.7%.
The quarterly dividend is $0.61 per share, or $2.44 annually, yielding 3.3%. Welltower has risen 7.69% since the start of the New Year.
Healthpeak Properties Inc. PEAK is a Denver-based REIT that owns and operates private-pay facilities such as life science centers, medical offices and senior housing. The company was added to the S&P 500 in 2008.
Healthpeak Properties owns 464 properties in Colorado, Tennessee and California that are valued at more than $20 billion. Many of Healthpeak Properties’ life science tenants are large, well-known pharmaceuticals, such as Amgen Inc, Pfizer Incand Bristol Myers Squibb Co.
Healthpeak Properties pays an annual dividend of $1.20 per share, yielding 4.3%. Its funds from operations (FFO) payout ratio is a comfortable 69%.
Third-quarter FFO of $0.43 was 19.4% above the $0.36 FFO achieved in the third quarter of 2021. Revenue of $520.41 million was up 8.1% from the third quarter of 2021.
On Jan. 3, Jefferies analyst Jonathan Petersen upgraded Healthpeak Properties from Hold to Buy. He also considerably raised the price target, from $23 to $29. At its most recent closing price of $27.32, that represents a potential return of 6.1%.
Healthpeak Properties had a negative total return of over 27% in 2022, but since Jan. 1, shares have risen by 7.39%.
Physicians Realty Trust DOC owns and operates a diverse group of 290 healthcare properties across 32 states. The majority of these are physician-leased medical office buildings.
On Dec. 14, Keybanc Capital Markets Inc. analyst Todd Thomas upgraded Physicians Realty Trust from Sector Weight to Overweight. He announced a price target of $17. At a recent closing price of $15.24, that represents a potential gain of 11.5%.
On Dec. 22, Physicians Realty Trust announced that its board of trustees has declared a quarterly dividend of $0.23 per share, its 38th consecutive quarterly dividend.
In its third-quarter operating results, Physicians Realty Trust reported revenue of $131.5 million, an increase of 14.1% over the third quarter of 2021, and normalized funds from operations of $0.26, in line with the results from the third quarter of 2021. A sale of three properties in Great Falls, Montana, for $116.3 million realized a net gain of $53.9 million.
Physicians Realty Trust is up 7.28% so far in 2023.
Keep in mind that despite these upgrades, analysts are not always correct, and investors should perform their own research before purchasing any stock.
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