Unappreciated aspects of Welltower , a real estate investment trust (REIT) that invests in health care infrastructure, are likely to translate into long-term growth ahead, according to Bank of America. Analyst Joshua Dennerlein reiterated his buy rating on the S & P 500 company, which owns senior housing as well as post-acute care and outpatient medical facilities. He also increased his price target by $61 to $190 — the highest on the Street, according to FastSet — which implies nearly 52% upside from Friday’s close. Following the call, Welltower moved more than 1% higher Monday. This year, the stock has been on a monster run, soaring about 41%, excluding reinvested dividends, versus 22.5% for the S & P 500. Toledeo, Ohio-based Welltower yields 2.14%, according to FactSet data. WELL YTD mountain WELL, year-to-date Notably, Dennerlein believes Welltower’s culture is a key underappreciated driver. He also highlighted its “extreme” focus on compounding long-term cash flow growth on a per share basis and its attention to data analytics and artificial intelligence. These aspects of the business model, he said, have created a “powerful” flywheel effect for growth that will allow it to surpass not only its peer Ventas but other REITs in coming years. “WELL offers a best in class operating platform, management team and data science capabilities to generate outsize returns relative to peers,” Bank of America said in a Monday note to clients. Looking ahead, the analyst sees higher rates of earnings growth well after 2029 – his model’s endpoint. Noting that the oldest members of the Baby Boom generation will hit 85 in 2031, he believes changing demographics will only increase demand for senior housing through 2050. Dennerlein also pointed to Welltower’s strong balance sheet as an unappreciated asset. “[A]n often-overlooked aspect of WELL’s strategy is the ‘optionality’ that they have built with their capital structure,” he said. Welltower has “built enormous debt capacity to take advantage of when they get to the other side of the Fed cycle.'” The Bank of America recommendation joins several other analysts on Wall Street who are bullish on Welltower. Of the 19 analysts covering the company, 13 rate it the equivalent of a buy while six are neutral.
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