On Tuesday, Truist Securities confirmed its Buy rating on Sabra Healthcare REIT Inc . (NASDAQ: NASDAQ:SBRA), currently trading at $16.91, with a steady price target of $18.00. The firm's analyst highlighted that the forecast for funds from operations (FFO) remains largely unchanged, supporting the maintained price target, which suggests a 13% total return potential.
According to InvestingPro analysis, the stock appears fairly valued based on its proprietary Fair Value model. The price target is anchored on a 12x FFO multiple and a roughly 20% premium to Truist's net asset value (NAV) estimate.
The analyst noted that Sabra Healthcare's stock is trading at a premium compared to its historical averages, but it is currently valued slightly lower relative to its peers, National Health Investors Inc . (NYSE: NYSE:NHI) and Omega Healthcare (NYSE:OHI) Investors Inc. (NYSE: OHI), which both hold a Hold rating. InvestingPro data reveals the company offers a substantial 7.1% dividend yield and has maintained dividend payments for 14 consecutive years.
Despite the higher than average valuation, the firm anticipates above-average earnings growth in the near term for Sabra Healthcare, with revenue growing 20.53% over the last twelve months.
Truist's $18 price target for Sabra Healthcare is derived from a combination of methods: one-third from a discounted cash flow analysis with a result of $19.73, one-third from an expected 18% premium to the projected NAV one year from now, and the final third from a multiple of 11.8 times the estimated 2025 FFO per share (FFOps).
The current market position of Sabra Healthcare REIT shows it trading at a 22% premium over Truist's NAV estimate, compared to a 1% average premium over the past five years. Additionally, the stock is trading at 12.1 times the forecasted 2024 FFO, which is above the historical average of 9.7 times. Despite these premiums, the Buy rating indicates confidence in the company's performance prospects.
In other recent news, Sabra Healthcare REIT experienced a downgrade from Mizuho (NYSE:MFG), moving from Outperform to Neutral. This adjustment was influenced by industry dynamics and potential regulatory changes affecting the Skilled Nursing REITs sector. Sabra Healthcare REIT also grapples with increased competition for senior housing deals, which could lead to lower-than-expected volumes. In addition, Clifton J. Porter II, a board member, will not seek reelection, concluding his term at the 2025 annual meeting, with no immediate plans for a replacement announced.
Turning to Zebra, the company reported a positive Q3 2024 with an increase in both occupancy and revenue. Skilled nursing facility occupancy rose by 130 basis points consecutively, and year-over-year revenue grew by 7.6%. The company's normalized FFO per share stood at $0.35 with normalized AFFO of $0.37 for Q3 2024. Zebra's management updated 2024 guidance projecting normalized FFO per share between $1.39 and $1.40, and normalized AFFO between $1.41 and $1.42.
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