Mizuho Securities Downgrades Ventas (VTR) to Neutral
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Mizuho Securities downgraded Ventas (NYSE: VTR) from Buy to Neutral with a price target of $63.00.
Analyst Richard Anderson commented, "Following the surprise exit from the skilled nursing business by Kindred Healthcare (KND), we think VTR executed a very positive transaction for shareholders – agreeing to sales back to KND at a 7% lease rate, which is way below market (i.e., above expectations) in our opinion. VTR’s cash flow prognosis across the board appears extremely visible, particularly after pushing out its lease expiration schedule to 2023 and 2025 for the long term acute care hospitals (LTACHs) it continues to own with KND. However, while the stock has had wide swings during 2016, it has significantly outperformed to its large-cap peers (YTD total return of +10%, versus - 4% and -12% for HCN and HCP, respectively). And with no discernible catalyst within the foreseeable future, we can envision the stock’s performance converging as investors debate the impact of Trump. To that point, VTR represents a poster-REIT for direct investment into acute-care hospitals (as well as the difficult LTACH business), despite the relatively small contribution to its total NOI. The company has a track-record of strategizing against the grain, and that has served shareholders well over the long-term. But assuming VTR will be focused on growing its hospital business over the coming quarters, we think at least thematic headwinds can get in the way of stock performance."
Shares of Ventas closed at $59.90 yesterday.
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