KeyBanc has increased its price target for American Healthcare REIT, Inc. (NYSE: AHR) to $27.00, up from the previous target of $16.00.
The firm maintains an Overweight rating on the stock. This decision follows a notable 51.2% rise in AHR shares since the announcement of second-quarter results for 2024, a performance that outstrips the healthcare REITs sector's 15.6% increase and the RMZ's 10.8% during the same period.
Since its initial public offering (IPO) on February 6, 2024, AHR's shares have surged by 85.5%, compared to gains of 48.9% and 17.6% for the healthcare REITs sector and the RMZ respectively.
The upgrade in the price target comes after American Healthcare REIT provided guidance for a 3.3% increase in 2024 Normalized Funds From Operations (FFO) and a significant 700 basis points rise in same-store net operating income (SSNOI) growth for 2024.
The company's post-IPO lock-up expiration also played a role in the stock's performance. KeyBanc attributes the strong price performance and re-rating of the multiple to the growth potential within the company's RIDEA portfolio, which represents approximately 61% of net operating income (NOI), the management's performance since the company went public, and the potential future accretion from the planned purchase of the remaining 24% interest in its largest operator, Trilogy.
In other recent news, American Healthcare REIT has been the focus of several analyst reviews. Truist Securities revised its price target for the company twice, first raising it to $17, reflecting a potential 24% total return, and later adjusting it to $16, maintaining a Buy rating. This adjustment suggests confidence in the company's growth prospects, despite the strong growth profile relative to the stock's valuation.
BofA Securities also revised its price target for the company, raising it from $19 to $27, maintaining a Buy rating. The adjustment follows recent management meetings which provided BofA Securities with a deeper understanding of the company's growth potential.
Moreover, American Healthcare REIT's same-store net operating income (SSNOI) growth is tracking ahead of expectations, which could lead to an increase in 2024 Net Funds From Operations (NFFO) guidance. Barclays (LON:BARC) Capital Inc., JMP Securities, KeyBanc, and RBC Capital Markets have given American Healthcare REIT an Overweight rating, highlighting the company's strategic positioning in the healthcare real estate market as a potential driver for Net Operating Income (NOI) growth.
InvestingPro Insights
As American Healthcare REIT, Inc. (NYSE:AHR) continues to show impressive growth, the latest data from InvestingPro enhances our understanding of the company's financial health and market performance. With a market capitalization of $3.27 billion, AHR is capturing investor attention. Notably, the company's revenue has grown by 9.24% over the last twelve months as of Q2 2024, indicating a solid upward trajectory in earnings. This aligns with the InvestingPro Tip that net income is expected to grow this year, further substantiating KeyBanc's optimistic outlook.
Investors should also consider the stock's recent momentum, as AHR has experienced a significant return over the last week, month, three months, and year, with price total returns of 9.73%, 29.3%, 69.83%, and 92.42%, respectively. This performance is just shy of the stock's 52-week high, trading at 99.96% of this peak value. These figures underscore the stock's robust short-term gains and may suggest a strong market sentiment. Additionally, the dividend yield stands at 4.07%, which could be attractive to income-focused investors.
While the P/E ratio is currently negative, indicating that the company has not been profitable over the last twelve months, analysts predict profitability in the coming year, as reflected in another InvestingPro Tip. This potential shift towards profitability could be a critical factor for investors considering long-term positions in AHR. For those seeking more in-depth analysis, InvestingPro offers additional tips on American Healthcare REIT, which can be found at https://www.investing.com/pro/AHR.
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