BofA Securities began coverage on shares of National Health Investors (NYSE:NHI), assigning a Buy rating and setting a price target of $92.00. The firm's valuation is based on a multiple of adjusted funds from operations (AFFO), specifically applying a 19x multiple to their 2025 AFFO estimate of $4.85 per share.
The chosen multiple reflects National Health Investors' combination of senior housing operating properties (SHOP) and net lease skilled nursing/senior housing (SH/SNF) assets in comparison to its industry peers.
BofA Securities' multiple is higher than that of net lease peers such as OHI and SBRA, and lower than SHOP peers that include WELL, VTR, and AHR. This positioning is due to National Health Investors' portfolio composition and the outlook for external growth.
The analyst noted potential upside risks to the price objective that could stem from an increased expansion into SHOP and higher volumes or more favorable cap rates in acquisitions.
The initiation of coverage and the establishment of the price target come as investors evaluate the company's financial outlook and strategic positioning within the healthcare real estate sector. National Health Investors' stock will continue to be observed by the market as it responds to the factors outlined by BofA Securities.
National Health Investors has been making significant strides in the market. The company exceeded Q2 expectations, marking the fourth consecutive quarter of surpassing projections.
This success is attributed to a substantial increase in net operating income (NOI) for its senior housing operating portfolio, which saw a 39.9% year-over-year increase. In response to these robust results, National Health Investors raised its full-year guidance and closed $56.6 million in investments this year.
In addition to these financial milestones, National Health Investors announced an underwritten public offering of 2 million shares of its common stock. The joint book-running managers for this transaction are BofA Securities, J.P. Morgan, Wells Fargo Securities, and BMO Capital Markets.
Despite these positive developments, Truist Securities maintains a conservative outlook on the future performance of National Health Investors' stock. The firm has increased the price target to $78.00 from the previous $65.00 but retained its Hold rating on the company.
InvestingPro Insights
As BofA Securities initiates coverage on National Health Investors (NYSE:NHI) with a positive outlook, real-time data from InvestingPro further enriches the investment perspective. National Health Investors is currently trading at a P/E ratio of 28.79, which suggests a premium valuation relative to near-term earnings growth. This aligns with BofA's valuation method, which applies a higher multiple relative to net lease peers. With a market capitalization of $3.91 billion, the company shows a solid financial standing.
InvestingPro Tips indicate that analysts have revised their earnings upwards for the upcoming period, hinting at potential optimism about the company's future performance. Additionally, National Health Investors has maintained dividend payments for an impressive 34 consecutive years, which may appeal to income-focused investors. The company's shares are trading near their 52-week high, with a 1-year price total return of 75.58%, reflecting strong investor confidence and market performance.
For investors seeking more in-depth analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/NHI, which could offer further insights into National Health Investors' investment potential.
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