BofA lifts Welltower stock price target to $242 from $221

On Tuesday, BofA Securities analyst Joshua Dennerlein updated the price target for Welltower, Inc. (NYSE:WELL), a real estate investment trust, increasing it to $242.00 from the previous $221.00. The analyst maintained a Buy rating on the stock. This adjustment reflects a bullish stance on Welltower’s prospects, highlighting the company’s ability to outperform within its industry. The stock is currently trading near its 52-week high of $151.96, having delivered an impressive 64.83% return over the past year. According to InvestingPro analysis, the company has demonstrated strong momentum with a 30% gain in the last six months alone.

Dennerlein’s commentary sheds light on the strategic moves by Welltower, noting the capture of industry talent and capital through its differentiated offering, WellGPT. The analyst suggests that Welltower has established a platform capable of delivering superior results compared to individual owners, a competitive edge that could be challenging for others to match without falling behind. As a prominent player in the Health Care REITs industry, Welltower has maintained dividend payments for 50 consecutive years, demonstrating remarkable stability. InvestingPro subscribers can access 14 additional key insights about Welltower’s market position and growth potential.

The price objective set by BofA Securities stands 45% above the consensus on Wall Street, indicating a strong conviction in the potential growth of Welltower. This optimism is also evident in Welltower’s inclusion on BofA’s Global Research US1 list, which represents a selection of top investment ideas.

The valuation method used by the analyst involves applying a 31x Adjusted Funds From Operations (AFFO) multiple to Welltower’s projected 2029 earnings estimate of $9.30 per share. The resulting figure is then discounted back at a rate of 4.49%, which is the 10-year Treasury rate as of February 14, 2025, to arrive at the new price target of $242.

Dennerlein’s analysis concludes with a reiteration of the Buy rating for Welltower, emphasizing the company’s strong positioning and the expectation of continued outperformance as reflected in the revised price target. InvestingPro data shows the company maintains a healthy financial profile with a "GOOD" overall health score and operates with a moderate level of debt. For a comprehensive analysis of Welltower’s valuation and growth prospects, investors can access the detailed Pro Research Report, available exclusively to InvestingPro subscribers.

In other recent news, Welltower Inc. reported a mixed bag for the fourth quarter of 2024, with earnings falling short of estimates but revenue exceeding expectations. The company’s adjusted earnings per share for the quarter were $0.19, missing the consensus estimate of $0.41, while the revenue was a robust $2.25 billion, surpassing the projected $2.12 billion. Notably, Welltower’s normalized funds from operations (FFO) per share, a vital metric for REITs, rose 17.7% year-over-year to $1.13, buoyed by a 23.9% surge in its Seniors Housing Operating portfolio.

For the full year 2024, Welltower achieved a normalized FFO of $4.32 per share, an 18.7% increase from 2023, and completed $7 billion in pro rata gross investments. However, the company’s outlook for 2025 is less rosy, with projected earnings per share in the range of $1.60 to $1.76, falling below the consensus estimate of $1.86. The projected normalized FFO for 2025 is between $4.79 and $4.95 per share.

In light of these recent developments, Welltower’s board has approved a 10% increase in the quarterly dividend, indicating confidence in the company’s growth prospects and financial performance. These projections and financial results are crucial information for investors, providing a snapshot of the company’s current standing and future expectations.

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