Credit Suisse analyst Omotayo Okusanya upgrades senior housing REITs Ventas (NYSE:VTR) and Welltower (NYSE:WELL) to Outperform from Neutral, saying it's time to shop for SHOP (senior housing operating portfolio) exposure.
The analyst expects senior housing recovery to "drive outsized earnings growth over the next few years," which should warrant a price/FFO multiple premium. The recent pullback in REIT stocks has provided an attractive opportunity to acquire Ventas (VTR) and Welltower (WELL) shares, he said.
Ventas (VTR) P/FFO is currently at 18.0x vs. 15.5x average and Welltower (WELL) is at 23.9x vs. 18.4x average.
"A favorable demand/supply backdrop suggests that both the VTR and WELL portfolios stand to gain about 700-900 bps of occupancy in their senior housing operating portfolios to hit pre-pandemic occupancy by 2023, with rent growth set to remain in the mid to high single digits against an inflationary backdrop," Okusanya wrote in a note to clients.
YTD, Welltower (WELL) has risen 4.5% and Ventas has gained 11%, both outperforming the S&P 500 Index, which declined 14% during that time as seen in this graph.
SA Quant rating gives VTR a Hold recommendation, the same as WELL.
SA contributor Dane Bowler takes an opposing view to Credit Suisse on Welltower (WELL) as structural oversupply remains.
Credit Suisse analyst Omotayo Okusanya upgrades senior housing REITs Ventas (NYSE:VTR) and Welltower (NYSE:WELL) to Outperform from Neutral, saying it's time to shop for SHOP (senior housing operating portfolio) exposure.
The analyst expects senior housing recovery to "drive outsized earnings growth over the next few years," which should warrant a price/FFO multiple premium. The recent pullback in REIT stocks has provided an attractive opportunity to acquire Ventas (VTR) and Welltower (WELL) shares, he said.
Ventas (VTR) P/FFO is currently at 18.0x vs. 15.5x average and Welltower (WELL) is at 23.9x vs. 18.4x average.
"A favorable demand/supply backdrop suggests that both the VTR and WELL portfolios stand to gain about 700-900 bps of occupancy in their senior housing operating portfolios to hit pre-pandemic occupancy by 2023, with rent growth set to remain in the mid to high single digits against an inflationary backdrop," Okusanya wrote in a note to clients.
YTD, Welltower (WELL) has risen 4.5% and Ventas has gained 11%, both outperforming the S&P 500 Index, which declined 14% during that time as seen in this graph.
SA Quant rating gives VTR a Hold recommendation, the same as WELL.
SA contributor Dane Bowler takes an opposing view to Credit Suisse on Welltower (WELL) as structural oversupply remains.