Welltower upped to Overweight at J.P. Morgan on senior housing revenue momentum

Jun. 22, 2022 10:15 AM ETWelltower Inc. (WELL), MPW, LTCBy: Max Gottlich, SA News Editor9 Comments

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J.P. Morgan analyst Michael Mueller on Wednesday has upgraded Welltower (NYSE:WELL) to Overweight from Neutral on the basis of its revenue momentum in senior housing.

The health-care REITs' revenue in senior housing is driven by existing resident rate increases as well as continued occupancy gains, Mueller wrote in a note.

"While a weaker housing market and the risk of a recession are clearly risks to the pace of the senior housing recovery, messaging out of NAREIT was that occupancy momentum actually increased in recent weeks," Mueller said.

Meanwhile, SA's Quant Rating screens Welltower (WELL) as a Sell, with the poorest mark in profitability, disagreeing with Mueller's upbeat coverage. The Quant Rating also warned investors that Welltower is at high risk of performing badly due to negative EPS revisions and declining growth.

Looking at Welltower (WELL) rival Medical Properties (NYSE:MPW), Mueller has cut the REIT to Neutral from Overweight amid higher funding costs.

Those "higher funding costs (particularly its equity implied cap rate) arguably make the math more difficult to pencil out for acquisitions," Mueller wrote in a separate note, adding that "we believe that the backdrop as it stands arguably makes future activity less predictable."

SA contributor Peter F. Way seems to agree with Mueller's bearish assessment on Medical Properties (MPW).

Earlier this week, (June 21) LTC Properties (NYSE:LTC) got upped to Market Perform at BMO as downside risk gets reduced.

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