On Friday, Truist Securities adjusted its outlook on American Healthcare REIT, Inc (NYSE:AHR), raising the stock's price target to $17.00, up from the previous target of $16.00. The firm maintained a Buy rating on the healthcare-focused real estate investment trust.
The revision reflects the firm's view of the company's potential for a 24% total return. Truist Securities acknowledges the balance that American Healthcare REIT must strike between its slightly above-target financial leverage and seizing attractive investment opportunities, such as the option to purchase Trilogy.
Despite maintaining the 2024 and 2025 Funds From Operations (FFO) estimates, the increased price target suggests confidence in the company's growth prospects. The firm cites the strong growth profile relative to the stock's valuation, which is considered low when measured by Price/Earnings to Growth (PEG) ratios.
The analyst from Truist Securities believes that American Healthcare REIT could see further benefits from the acquisition of the remainder of Trilogy, as well as an improvement in dividend coverage in the following year. This positive outlook is based on the company's strategic financial management and investment decisions.
In other recent news, American Healthcare REIT, Inc. (AHR) has been the subject of several analyst reviews and financial performance evaluations. Analysts from multiple financial institutions have given AHR an Overweight rating, with Barclays (LON:BARC) Capital Inc., JMP Securities, KeyBanc, and RBC Capital Markets all setting optimistic price targets for the company. Truist Securities recently lowered its price target for AHR to $16, but maintained its Buy rating, suggesting continued growth potential for the company.
AHR's strategic positioning in the healthcare real estate market, particularly its exposure to long-term care fundamentals and the Senior Housing Operating Portfolio (SHOP) segment, has been highlighted as a key driver for potential Net Operating Income (NOI) growth. The company's proactive approach towards strategic dispositions and acquisitions, such as the sale of non-core assets and the purchase of a SHOP portfolio in Oregon, reflect its commitment to optimizing its asset base.
Recent developments also include AHR's impressive same-store net operating income (SSNOI) growth, which is tracking ahead of expectations and could lead to an increase in 2024 Net Funds From Operations (NFFO) guidance. However, investors should be aware of the potential risk associated with the company's outpatient medical portfolio and the need to cover dividends later in the year. Despite these challenges, AHR's recent successful IPO and improved financial stability post-IPO have been noted as positive indicators for the company's future performance.
InvestingPro Insights
Following the recent price target update by Truist Securities on American Healthcare REIT, Inc (NYSE:AHR), InvestingPro data and tips offer additional insights into the company's financials and market performance. The data indicates that American Healthcare REIT has a market capitalization of $1.72 billion and is trading at a Price/Book ratio of 0.88 as of the last twelve months ending in Q1 2024, highlighting a potentially undervalued stock in terms of its assets.
Moreover, the company's dividend yield stands at a significant 6.91%, which aligns with one of the InvestingPro Tips pointing out that the company pays a substantial dividend to its shareholders. This could attract investors seeking income-generating investments. However, with a negative P/E ratio of -22.57 and adjusted P/E ratio of -26.19 for the same period, the company is not currently profitable, which is also supported by another InvestingPro Tip indicating that the company was not profitable over the last twelve months.
Despite these challenges, analysts predict that American Healthcare REIT will be profitable this year, which could be a turning point for the company. Additionally, with a revenue growth of 12.09% over the last twelve months as of Q1 2024, there is evidence of solid top-line expansion. Investors interested in a deeper dive into American Healthcare REIT's financials and future prospects can explore further with InvestingPro, which offers additional tips for a comprehensive analysis. For those looking to upgrade, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.