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On Thursday, Mizuho (NYSE:MFG) Securities expressed a positive outlook on Welltower Inc. (NYSE:WELL), an $84 billion market cap healthcare REIT that has delivered an impressive 59% return over the past year, maintaining its Outperform rating and a price target of $141.00. According to InvestingPro data, the company currently trades near its 52-week high of $140.75. The firm’s analysts highlighted Welltower’s recent announcement of launching a new private funds management business, which will initially manage $2 billion of third-party capital. Additionally, Welltower disclosed the acquisition of NorthStar Healthcare Income for approximately $900 million, at an estimated $184,000 per unit. This acquisition is set to be allocated to the new fund.
The analysts at Mizuho consider these developments to be significantly beneficial for Welltower for a variety of reasons. Firstly, the creation of a growing assets under management (AUM) base will lead to accruing asset management fees and potential promotion fees upon successful monetization. Secondly, the expansion into the U.S. senior housing market is expected to increase the total addressable market (TAM) without diluting the company’s core growth. InvestingPro analysis reveals strong fundamentals, with revenue growing at 20% and analysts forecasting 19% growth for the current fiscal year.
Moreover, the move is seen to allow for market densification with existing operators and to create a more substantial and committed leadership team, as promotion fees will accrue solely to non-executive officers. Lastly, the analysts believe that these strategic actions further demonstrate the value and potential monetization opportunities of Welltower’s data science platform.
Mizuho also reiterated Welltower as a Top Pick, signaling strong confidence in the company’s performance and strategic initiatives. The acquisition of NorthStar Healthcare Income is viewed as a strategic addition to Welltower’s new fund, which is expected to contribute to the company’s growth and market presence in the senior housing sector. InvestingPro subscribers can access 12 additional key insights about Welltower, including its 49-year track record of consistent dividend payments and its GREAT financial health score, along with a comprehensive Pro Research Report that provides deep-dive analysis of the company’s fundamentals and growth prospects.
In other recent news, Welltower has been making significant strides in the real estate investment trust (REIT) sector. BofA Securities recently raised the company’s price target from $190 to $221, citing long-term value in Welltower’s core business. Analysts highlighted the potential to monetize Welltower’s AI-driven real estate technology platform, WellGPT, which has been praised for enhancing real estate investment decisions.
Welltower also announced key executive promotions as part of its strategy to strengthen the company’s growth. The company has delivered a 43% return over the past year and maintains a strong financial health rating. Welltower’s third quarter of 2024 reported a significant 21% increase in funds from operations per share, with quarterly revenue exceeding the $2 billion mark for the first time.
Jefferies analysts upgraded Welltower’s stock from a Hold to a Buy rating, influenced by the promising outlook for senior housing operating portfolios (SHOP). Raymond (NSE:RYMD) James also raised the price target for Welltower from $145.00 to $155.00, maintaining a strong buy rating. This decision is supported by the company’s remarkable 20.26% revenue growth over the last twelve months.
Welltower’s board of directors saw the departure of Diana W. Reid, who resigned to assume the role of CEO at Freddie Mac (OTC:FMCC). The board size has subsequently been reduced to nine directors. These are recent developments that investors should consider as they continue to follow Welltower’s progress in the market.
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