Mizuho Securities Upgrades HCP (HCP) to Buy
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Mizuho Securities upgraded HCP (NYSE: HCP) from Neutral to Buy with a price target of $32.00.
Analyst Richard Anderson commented, "In our opinion, we think the improved quality of the new leadership team (CEO Herzog and President/CIO Hutchens) is not debatable given both of their past accomplishments at various stops along the way. We expect the company to acknowledge the mistakes of the past at HCP, which we think will help influence behaviors in the future. Gone will be short-term perspectives on growth in exchange for a long-term and predictable (albeit potentially muted) growth profile. What is left now is a three-pronged portfolio of life science (positive read-through under Trump), medical office (lower cost outpatient should counter some of the hospital association) and senior housing (experiencing some supply pressure, but a property type that is benefiting from positive long-term demand fundamentals). The complete lack of skilled nursing is a consequence of the QCP spin that is performing about as poorly as feared. That lingering bad taste could keep some investors away from “new-co”, which we can appreciate. But our ratings upgrade is based on the look ahead and not a dwell on the past. The other lingering risk is Brookdale Senior Living (BKD) will remain 25% of the portfolio after all the sales activity, which may be too high and a factor in our NAV estimate. Short of a surprise transaction to address this concentration, this risk will remain an issue for investors to underwrite."
Shares of HCP closed at $28.68 yesterday.
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