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On Tuesday, Sabra Healthcare REIT Inc (NASDAQ:SBRA). stock (currently trading at $16.63 with a market cap of $3.93 billion) received an upgrade from JMP Securities, with the firm raising its stock rating from Market Perform to Market Outperform and setting a new price target of $20.00.
The upgrade reflects a positive outlook from JMP Securities, anticipating that Sabra Healthcare will experience a year of unique value creation in 2025. According to InvestingPro analysis, the company's overall financial health is rated as "GREAT," supporting this optimistic outlook.
The research firm's analysts highlighted several factors contributing to this optimistic view. They noted that Sabra Healthcare has effectively navigated past the operational challenges posed by the pandemic, as evidenced by its impressive 20.53% revenue growth over the last twelve months.
Additionally, they expect the skilled nursing rent coverage ratios, which are already approaching twice the cost, to further expand due to changes in reporting methodology and a favorable Medicaid rate environment.
Another key point raised by JMP Securities is the projected growth in senior housing assets. Analysts foresee multi-year, outsized net operating income (NOI) growth for Sabra Healthcare, driven by a significant lack of development in the sector.
This anticipated growth is expected to lead to a revaluation of Sabra Healthcare's stock, presenting what JMP Securities believes to be an attractive opportunity for investors. The company has maintained dividend payments for 14 consecutive years, currently offering a substantial 7.22% yield.
The firm's $20.00 price target for Sabra Healthcare's stock is based on a 13 times multiple of the company's estimated 2026 funds available for distribution (FAD). This target suggests a potential capital appreciation of 20.3% from the stock's current level. Additionally, with an anticipated yield of 7.2%, the total potential return for investors is pegged at 27.5%, according to JMP Securities' analysis.
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