On Thursday, KeyBanc has increased the price target for CareTrust REIT (NASDAQ:NYSE:CTRE) shares to $27.00, up from the previous target of $25.00. The firm has also reiterated its Overweight rating on the stock. The adjustment reflects the analyst's confidence in the company's ability to drive earnings in the near-to-medium term due to its strong acquisition pipeline, solid balance sheet, and favorable cost of capital.
CareTrust REIT, which specializes in healthcare-related real estate, notably skilled nursing facilities (SNFs), has been identified as having nearly $1 billion in available liquidity and even more debt capacity. This financial footing is expected to support the company's $260 million investment pipeline, which primarily consists of SNF investments, including real estate purchases and loans.
The analyst cited the company's abundance of opportunities beyond its immediately actionable investments as a key factor that should continue to drive future investments that are accretive to earnings.
Despite a decrease in the normalized Funds From Operations (FFO) estimates for 2024 and 2025 to account for near-term dilution from At-The-Market (ATM) issuance, the firm's long-term outlook for CareTrust REIT remains positive.
KeyBanc's stance on CareTrust REIT is based on the belief that the company is well-positioned to capitalize on external growth opportunities within the long-term care sector. The revised stock price target of $27 takes into account the company's additional investment capacity and the potential for future earnings growth.
The Overweight rating indicates the firm's expectation that CareTrust REIT's stock will outperform the average return of the stocks that KeyBanc covers over the next 12 to 18 months.
InvestingPro Insights
As CareTrust REIT (NASDAQ:CTRE) continues to capture the attention of analysts with its robust acquisition pipeline and solid financial position, real-time data from InvestingPro underscores the company's current market dynamics.
With a market capitalization of $3.53 billion and a P/E ratio that has adjusted to 33.78 over the last twelve months as of Q1 2024, investors are valuing the company's earnings prospects. The revenue growth of nearly 15% over the last twelve months, combined with a strong gross profit margin of 95.56%, highlights CareTrust REIT's efficient operations and potential for scalability.
Two InvestingPro Tips that investors might find particularly relevant are the company's consistent dividend growth, with dividends raised for 8 consecutive years, and the expectation that net income is expected to grow this year. These factors contribute to the company's attractiveness for income-focused portfolios and underline the confidence in its financial health. Moreover, CareTrust REIT is trading near its 52-week high, reflecting the market's positive sentiment towards the stock.
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