UBS initiates Welltower stock with Buy rating, citing senior housing growth

Investing.com - UBS initiated coverage on Welltower, Inc. (NYSE:WELL) with a Buy rating and a $195.00 price target on Friday. The healthcare REIT giant, currently trading at $166.53 with a market capitalization of $111.38 billion, has demonstrated impressive momentum with a 33.93% year-to-date return. According to InvestingPro analysis, the stock is currently trading above its Fair Value.

The firm expects "a long tail of positive estimate revisions and AFFO growth" that support Welltower’s premium valuation, with upside to 2026 and 2027 consensus AFFO of 3% and 5%, respectively.

UBS identified four key growth drivers: sustained organic growth from favorable senior housing supply/demand dynamics, greater than expected acquisition volume increasing SHOP (senior housing operating portfolio) exposure to 70% by 2027 from the current 59%, continued Welltower Business System implementation, and the company’s new fund business.

The firm projects Welltower’s SHOP will achieve occupancy gains of approximately 880 basis points over the next several years, assuming peak occupancy of 96%, which will power healthy rate growth of 5%-7%.

UBS acknowledged that Welltower shares trade at a premium next-twelve-months FFO multiple of 30x compared to its five-year average of 23x, and at a 95% premium to Healthcare REITs versus its five-year average premium of 65%, but expects the company to "grow into its valuation."

In other recent news, Welltower Inc. reported its financial results for the second quarter of 2025, meeting earnings expectations with an earnings per share (EPS) of $0.45, aligning with forecasts. The company exceeded revenue projections, reporting $2.55 billion compared to the anticipated $2.45 billion, marking a 4.08% surprise. Additionally, Welltower registered the resale of 949,412 shares, which were issued as part of a recent property acquisition. These shares were registered with the Securities and Exchange Commission, as detailed in a prospectus supplement. The shares were issued to a selling stockholder in connection with the transaction. The prospectus is part of Welltower’s automatic shelf registration statement initially filed on March 28, 2025. These developments highlight Welltower’s active engagement in both financial performance and strategic acquisitions.

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