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Investing.com - KeyBanc raised its price target on CareTrust REIT (NYSE:CTRE) to $36.00 from $33.00 on Thursday, while maintaining an Overweight rating on the healthcare real estate investment trust. The company, which maintains an "GREAT" InvestingPro Financial Health score, currently trades near its 52-week high of $33.52.
The price target increase follows CareTrust’s announcement of a 15.5 million share follow-on issuance, which was upsized to 20 million shares for gross proceeds of $640 million, or $736 million including the overallotment option. The REIT has demonstrated strong financial management, maintaining a 94.9% gross profit margin and raising its dividend for nine consecutive years.
KeyBanc expects the proceeds will fund CareTrust’s $600 million investment pipeline, repay existing line balances, and create additional capacity for future investments. The firm noted this investment pipeline excludes potential future portfolio transactions, which may include a larger strategic SHOP transaction under evaluation. According to InvestingPro, the company operates with moderate debt levels and maintains strong liquidity, with current assets exceeding short-term obligations.
The equity issuance locks in CareTrust’s near-term funding needs at what KeyBanc describes as an attractive cost of equity, while creating incremental debt capacity for future deals.
KeyBanc highlighted that while timing differences between equity raises and funding deals could impact near-term estimates, CareTrust’s ability to drive growth through accretive investments and an estimated $2 billion-plus of debt capacity remains attractive to the firm.
In other recent news, CareTrust REIT reported its second-quarter 2025 earnings, surpassing analysts’ expectations. The company achieved an earnings per share (EPS) of $0.35, slightly above the forecast of $0.34, and reported revenues of $112.47 million, significantly exceeding the anticipated $80.39 million. This marks a 39.91% surprise in revenue. Additionally, CareTrust REIT announced the pricing of its upsized public offering of 20 million shares of common stock at $32.00 per share, with closing expected soon. The company has granted underwriters a 30-day option to purchase up to an additional 3 million shares. Proceeds from this offering will be used to finance new investments and repay outstanding borrowings. Previously, CareTrust REIT had announced plans to offer 15.5 million shares of common stock, subject to market conditions, with an option for underwriters to purchase an additional 2.325 million shares. These developments reflect the company’s strategic financial maneuvers to support its growth initiatives.
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