Advertisement
New Zealand markets open in 1 hour 21 minutes

  • NZX 50

    11,836.04
    -39.31 (-0.33%)
     

  • NZD/USD

    0.5902
    -0.0017 (-0.29%)
     

  • ALL ORDS

    7,898.90
    +37.90 (+0.48%)
     

  • OIL

    82.58
    -0.11 (-0.13%)
     

  • GOLD

    2,393.80
    +5.40 (+0.23%)
     

Here's Why It Is Wise to Retain Ventas (VTR) Stock Right Now

Zacks Equity Research
·3-min read

Ventas Inc. VTR is well-poised to benefit from its high-quality diversified healthcare real estate portfolio. A healthy balance-sheet position also acts as a tailwind. Nonetheless, reduced cash flow due to the sale of assets, and competition with national and local operators remain woes.

Increasing longevity of the aging U.S. population and growth in biopharma drug development opportunities are creating demand for VTR’s life-science real estates. Moreover, with effective vaccine roll-outs, Ventas sees emerging positive senior-housing operation trends in the United States, with move-ins exceeding the pre-pandemic levels, while move-outs remaining steady.

Amid favorable demographics and growing outpatient trends, Ventas’ office segment, which includes medical office buildings (MOBs), academic medical and research & innovation (R&I) centers, is poised to gain.

This healthcare REIT owns R&I centers in major life-science clusters of Cambridge, San Francisco and Maryland, with presence on more than 16 top-tier research university campuses.

Apart from these, Ventas enjoys a healthy balance sheet position and is steadily making efforts to enhance its liquidity and financial strength. VTR had $2.2 billion of liquidity as of Nov 3. With a well-laddered debt maturity profile, VTR has decent financial flexibility to pursue growth endeavors.

ADVERTISEMENT

However, Ventas operates in a cut-throat market, and competes with national and local healthcare operators. VTR’s operators contend with peers for occupancy and management of labor costs. This significantly limits its power to boost profitability and ink deals at attractive rates.

Ventas is making efforts to unlock the value of its assets through opportunistic disposals of non-core assets. Although such efforts enable it to optimize its portfolio quality, better manage financial obligations and reinvest in attractive opportunities, dilution in earnings and reduced cash flows in the near term from the sale of assets are unavoidable.

Shares of this currently Zacks Rank #3 (Hold) player have declined 8.2% in the past six months against the industry’s growth of 9.1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Image Source: Zacks Investment Research

Stocks to Consider

Some top-ranked stocks from the REIT sector are Extra Space Storage EXR, Cedar Realty Trust CDR and Cubesmart CUBE.

Extra Space flaunts a Zacks Rank #1 (Strong Buy) at present. Shares of EXR have gained 27% in the past six months.

The Zacks Consensus Estimate for Extra Space’s 2021 funds from operations (FFO) per share has been raised 3.3% over the past two months. Over the last four quarters, EXR’s FFO per share surpassed the consensus mark on all occasions, the average being 5.9%.

The Zacks Consensus Estimate for Cedar Realty’s 2021 FFO per share has been raised 2.6% to $2.36 in the past two months. Over the last four quarters, CDR’s FFO per share surpassed the consensus mark twice and missed the same on the other two occasions, the average beat being 6.4%.

Currently, CDR sports a Zacks Rank of 1. Shares of Cedar Realty have appreciated 49.5% in the past six months.

The Zacks Consensus Estimate for Cubesmart’s 2021 FFO per share has been raised 2.4% over the past two months. Over the last four quarters, CUBE’s FFO per share surpassed the consensus mark on all occasions, the average being 7.1%.

Cubesmart flaunts a Zacks Rank of 1 at present. Shares of CUBE have rallied 13% in the past six months.

Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Ventas, Inc. (VTR) : Free Stock Analysis Report

Extra Space Storage Inc (EXR) : Free Stock Analysis Report

CubeSmart (CUBE) : Free Stock Analysis Report

Cedar Realty Trust, Inc. (CDR) : Free Stock Analysis Report

To read this article on Zacks.com click here.