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On Tuesday, Evercore ISI has increased the price target for Welltower Inc. (NYSE:WELL) shares to $145, up from the previous target of $144, while maintaining an "In Line" rating. The stock, currently trading near its 52-week high of $157.16, has demonstrated remarkable momentum with a 71.56% return over the past year, according to InvestingPro data. The adjustment follows a detailed analysis of the expected financial outcomes from Welltower’s recent acquisition of the Amica Senior Lifestyles portfolio.
The acquisition, valued at $3.24 billion, is anticipated to positively impact Welltower’s financial performance, building on its impressive 21.58% revenue growth in the last twelve months. As a result, Evercore ISI’s estimates for the company’s funds from operations (FFO) for fiscal year 2025 have been slightly increased from $4.93 to $4.95, surpassing the consensus estimate of $4.87. Similarly, the FFO estimate for fiscal year 2026 has been adjusted upwards from $5.64 to $5.66, which is 2.7% higher than the consensus of $5.51. InvestingPro analysis reveals that Welltower has maintained dividend payments for 50 consecutive years, currently offering a 1.71% yield.
In addition to FFO, the firm’s adjusted funds from operations (AFFO) estimates for Welltower have also seen a modest rise. For fiscal year 2025, the AFFO estimate has gone up to $4.43 from $4.41, and for fiscal year 2026, the estimate has increased to $5.12 from $5.11. Evercore ISI believes that the financial and strategic benefits of the Amica deal are evident and that it represents another successful transaction for Welltower, providing the company with additional growth opportunities through 2026.
The report acknowledges that some investors may have expected a more significant increase in estimates. However, Evercore ISI had already factored in a considerable amount of transaction activity for fiscal years 2025 and 2026. Despite the modest increase in estimates, the firm has been consistently surprised by the level of deal flow, with 2025 already off to a strong start. Welltower is expected to continue engaging in transactions over the next 12 to 24 months.
The new price target of $145 reflects the slightly higher AFFO estimates and the implications of financing assumptions related to the transaction. While recognizing Welltower’s exceptional execution across all business facets, evidenced by its GREAT Financial Health Score from InvestingPro, Evercore ISI suggests looking for a more favorable entry point, given that the company’s shares are currently trading at nearly 35 times the revised AFFO estimate for 2025 and nearly 31 times the new AFFO estimate for 2026. With a current P/E ratio of 98.56x and a market capitalization of $100.6 billion, InvestingPro’s comprehensive analysis indicates the stock is currently trading above its Fair Value, making it one of several healthcare REITs featured in InvestingPro’s detailed research reports covering over 1,400 US equities.
In other recent news, Welltower Inc. reported mixed fourth quarter 2024 results with earnings per share of $0.19, which fell short of the $0.41 consensus estimate. However, the company’s quarterly revenue exceeded expectations at $2.25 billion, compared to the anticipated $2.12 billion. Welltower’s normalized funds from operations per share increased by 17.7% year-over-year to $1.13, and same-store net operating income grew by 12.8%, driven by a 23.9% rise in its Seniors Housing Operating portfolio. For the full year 2024, the company achieved normalized FFO of $4.32 per share, marking an 18.7% increase from 2023.
Looking forward, Welltower issued a softer 2025 guidance, forecasting earnings per share between $1.60 and $1.76, which is below the consensus estimate of $1.86. In analyst updates, RBC Capital Markets upgraded Welltower’s stock rating to Outperform and raised the price target to $168, citing growth prospects and operational efficiencies. Meanwhile, BofA Securities increased its price target for Welltower to $242, maintaining a Buy rating and highlighting the company’s competitive edge in its industry. Both analysts noted Welltower’s strategic initiatives and strong growth outlook as positive indicators for future performance.
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