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Ventas Stock Rises 48.9% in Six Months: What You Should Know
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Shares of Ventas (VTR - Free Report) have gained 48.9% in the past six months compared with the industry’s growth of 15.8%.
This healthcare real estate investment trust (REIT) is well-positioned to gain from its diverse portfolio of healthcare real estate assets in the key markets of the United States and the U.K. An aging population and the rise in healthcare expenditure by senior citizens are likely to benefit the senior housing operating portfolio (SHOP).
The outpatient medical portfolio is expected to gain from favorable outpatient visit trends. Ventas’ accretive investments to expand its research portfolio are encouraging.
Mid-September, Ventas secured an agreement with Kindred Healthcare, LLC and its parent company, ScionHealth. This agreement is regarding 23 long-term acute care hospitals, whose lease term is scheduled to mature on April 30, 2025, under the existing master lease between Ventas and Kindred. This move enhances patient care facilities, strengthens the existing master lease and provides upside for Ventas.
Image Source: Zacks Investment Research
Let’s find out the factors behind the surge in the stock price.
The senior citizen population is expected to rise in the years ahead. As a result, the national healthcare expenditure by senior citizens, who constitute a major customer base for healthcare services and incur higher healthcare expenditures than the average population, is likely to increase in the upcoming period.
Per the company’s second-quarter 2024 earnings presentation, the U.S. population aged 80 years and above is expected to grow 24% over the next five years. With an expectation of a rising senior citizens population in the years ahead and muted new supply in its markets, VTR is well-prepared for a compelling multiyear growth opportunity.
Ventas’ senior housing portfolio is positioned in markets with favorable demographics, strong net absorption and affordability. Ventas expects its SHOP segment's same-store cash net operating income to grow between 13% and 16% in 2024.
Rising Demand for VTR’s OM&R Portfolio
Amid favorable demographics and growing outpatient trends, Ventas is committed to capitalizing on this upside within its outpatient medical and research (OM&R) portfolio, which includes outpatient medical buildings and research centers.
The growth in the people aged 65 years and above is driving the increase in outpatient visits as they make three times more visits to the doctor than the general population. From 2020 to 2030, the 65+ aged population is expected to grow by approximately 15 million. Therefore, this portfolio is well-positioned to capitalize on this rising demand.
In the OM&R portfolio, Ventas generated more than 3% same-store cash NOI growth in the second quarter of 2024 with strong margins and stable occupancy. Ventas expects the OM&R portfolio's same-store cash NOI to grow in the range of 2.75-3.25% in 2024.
VTR’s Accretive Investments
Ventas is carrying out accretive investments to enhance its research portfolio, which is essential for the delivery of crucial healthcare services and research related to life-saving vaccines and therapeutics. Ventas owns research centers in life science clusters, with a presence in some of the top-tier research university campuses. With top-rated tenants and long-lease terms, its high-quality portfolio assures steady growth in cash flows.
VTR’s Balance Sheet Strength
Ventas maintains a healthy balance sheet position. It has been making efforts to enhance its liquidity position and financial strength. As of June 30, 2024, the company had approximately $3.3 billion of liquidity. It has substantially cleared 2024 remaining debt maturities. It also enjoys favorable credit ratings from S&P Global Ratings and Moody’s, providing access to the debt market. The company’s decent financial flexibility is likely to support its growth endeavors.
Risks Likely to Affect VTR’s Positive Trend
Competition from national and local operators limits its power to raise rents and drive profitability. Dependence on a few tenants pose key concerns.
The Zacks Consensus Estimate for Cousins Properties 2024 FFO per share stands at $2.67, indicating an increase of 1.9% from the year-ago reported figure.
The Zacks Consensus Estimate for Lamar Advertising’s 2024 FFO per share is pinned at $8.09, suggesting year-over-year growth of 8.3%.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.
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Ventas Stock Rises 48.9% in Six Months: What You Should Know
Shares of Ventas (VTR - Free Report) have gained 48.9% in the past six months compared with the industry’s growth of 15.8%.
This healthcare real estate investment trust (REIT) is well-positioned to gain from its diverse portfolio of healthcare real estate assets in the key markets of the United States and the U.K. An aging population and the rise in healthcare expenditure by senior citizens are likely to benefit the senior housing operating portfolio (SHOP).
The outpatient medical portfolio is expected to gain from favorable outpatient visit trends. Ventas’ accretive investments to expand its research portfolio are encouraging.
Mid-September, Ventas secured an agreement with Kindred Healthcare, LLC and its parent company, ScionHealth. This agreement is regarding 23 long-term acute care hospitals, whose lease term is scheduled to mature on April 30, 2025, under the existing master lease between Ventas and Kindred. This move enhances patient care facilities, strengthens the existing master lease and provides upside for Ventas.
Image Source: Zacks Investment Research
Let’s find out the factors behind the surge in the stock price.
The senior citizen population is expected to rise in the years ahead. As a result, the national healthcare expenditure by senior citizens, who constitute a major customer base for healthcare services and incur higher healthcare expenditures than the average population, is likely to increase in the upcoming period.
Per the company’s second-quarter 2024 earnings presentation, the U.S. population aged 80 years and above is expected to grow 24% over the next five years. With an expectation of a rising senior citizens population in the years ahead and muted new supply in its markets, VTR is well-prepared for a compelling multiyear growth opportunity.
Ventas’ senior housing portfolio is positioned in markets with favorable demographics, strong net absorption and affordability. Ventas expects its SHOP segment's same-store cash net operating income to grow between 13% and 16% in 2024.
Rising Demand for VTR’s OM&R Portfolio
Amid favorable demographics and growing outpatient trends, Ventas is committed to capitalizing on this upside within its outpatient medical and research (OM&R) portfolio, which includes outpatient medical buildings and research centers.
The growth in the people aged 65 years and above is driving the increase in outpatient visits as they make three times more visits to the doctor than the general population. From 2020 to 2030, the 65+ aged population is expected to grow by approximately 15 million. Therefore, this portfolio is well-positioned to capitalize on this rising demand.
In the OM&R portfolio, Ventas generated more than 3% same-store cash NOI growth in the second quarter of 2024 with strong margins and stable occupancy. Ventas expects the OM&R portfolio's same-store cash NOI to grow in the range of 2.75-3.25% in 2024.
VTR’s Accretive Investments
Ventas is carrying out accretive investments to enhance its research portfolio, which is essential for the delivery of crucial healthcare services and research related to life-saving vaccines and therapeutics. Ventas owns research centers in life science clusters, with a presence in some of the top-tier research university campuses. With top-rated tenants and long-lease terms, its high-quality portfolio assures steady growth in cash flows.
VTR’s Balance Sheet Strength
Ventas maintains a healthy balance sheet position. It has been making efforts to enhance its liquidity position and financial strength. As of June 30, 2024, the company had approximately $3.3 billion of liquidity. It has substantially cleared 2024 remaining debt maturities. It also enjoys favorable credit ratings from S&P Global Ratings and Moody’s, providing access to the debt market. The company’s decent financial flexibility is likely to support its growth endeavors.
Risks Likely to Affect VTR’s Positive Trend
Competition from national and local operators limits its power to raise rents and drive profitability. Dependence on a few tenants pose key concerns.
Stocks to Consider
Some better-ranked stocks from the broader REIT sector are Cousins Properties (CUZ - Free Report) and Lamar Advertising (LAMR - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Cousins Properties 2024 FFO per share stands at $2.67, indicating an increase of 1.9% from the year-ago reported figure.
The Zacks Consensus Estimate for Lamar Advertising’s 2024 FFO per share is pinned at $8.09, suggesting year-over-year growth of 8.3%.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.