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On Monday, KeyBanc Capital Markets adjusted its financial outlook for American Healthcare REIT , Inc (NYSE:AHR), reducing the price target to $34 from the previous $35 while sustaining an Overweight rating on the stock. The revision followed an in-depth evaluation of the company’s operations and potential growth opportunities. The stock, currently trading near its 52-week high of $30.96, has delivered an impressive 113.79% return over the past year. According to InvestingPro data, the company’s market capitalization stands at $4.86 billion, with analysts maintaining a positive outlook as net income is expected to grow this year.
KeyBanc’s analysis included meetings and a property tour with American Healthcare REIT and its principal operator, Trilogy, which is responsible for approximately 60% of the company’s net operating income (NOI). The examination reaffirmed KeyBanc’s position on the company’s near- to medium-term growth prospects within its long-term care operating businesses, specifically Integrated Senior Healthcare Centers (ISHCs) and Senior Housing (NASDAQ:DHC) Operating Properties (SHOP), which together account for about 70% of AHR’s NOI. The company has demonstrated solid operational performance with an 11.11% revenue growth in the last twelve months, while maintaining a healthy current ratio of 1.34, indicating strong liquidity management.
American Healthcare REIT is anticipated to gain from a favorable supply-demand imbalance, which is expected to continue propelling above-average growth in its ISHCs and SHOP segments. The company is also actively seeking a robust pipeline of acquisition opportunities, ensuring a disciplined approach to quality and return requirements. This strategy is set to provide a consistent flow of redevelopment investments with attractive returns.
Despite observing slower growth within its Other Managed (OM) and Triple-Net lease segments, as well as plans to strategically sell non-core assets, KeyBanc believes the fundamentals’ trajectory and strategic capital recycling position AHR as a compelling growth narrative within the REIT sector. The firm acknowledges the potential for American Healthcare REIT to outperform its 2025 management guidance by effectively managing internal growth, external investments, and its balance sheet. However, due to a conservative revision of the company’s 2025 and 2026 estimates, KeyBanc has slightly decreased the price target. The Overweight rating indicates the firm’s continued confidence in the stock’s performance potential. The company currently offers a 3.29% dividend yield, and InvestingPro analysis reveals several additional key metrics and insights available to subscribers, including a comprehensive Pro Research Report that provides deep-dive analysis of AHR’s financial health and growth prospects.
In other recent news, American Healthcare REIT reported its fourth-quarter 2024 earnings, revealing a net loss per share of $0.21 and revenue of $542.74 million. Despite the loss, the company highlighted significant growth in its senior housing operations, particularly in its Trilogy and SHOP segments. Analysts have taken note of the company’s financial maneuvers; Truist Securities raised its price target to $32 while maintaining a Buy rating, and JMP Securities increased its target to $35, holding a Market Perform rating. These adjustments follow the company’s strategic actions, including asset sales and equity offerings, which have notably improved its financial leverage. The company’s efforts have reduced its net debt to adjusted EBITDA ratio to 4.3x by the end of 2024. Looking ahead, American Healthcare REIT has projected its 2025 Core Funds From Operations (FFO) to be between $1.56 and $1.60 per share. The company is also planning $140 million in new development projects, reflecting its commitment to expanding its presence in the senior housing market. Analysts have expressed optimism about the company’s future, citing favorable demographic trends in the senior housing sector.
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