On Friday, KeyBanc Capital Markets adjusted its price target for American Healthcare REIT, Inc (NYSE:AHR), raising it to $28 from $27 and maintaining an Overweight rating on the stock. This change follows the company's announcement of an upsized follow-on common equity offering. The offering is intended to fund the acquisition of the remaining interest in Trilogy, an operator of integrated senior health campuses, and to repay existing debt.
The analyst at KeyBanc noted that the transaction is expected to yield in the high-single-digit range based on the net operating income (NOI) as of the second quarter of 2024, which is seen as a conservative estimate compared to the actual first-year NOI achieved. The analyst anticipates that the accretion from this transaction could exceed previous estimates.
The equity offering and subsequent transaction are projected to be approximately $0.11 per share accretive to American Healthcare REIT's normalized funds from operations (NFFO) on an annualized basis. Consequently, KeyBanc has raised its 2025 NFFO estimate to $1.52 per share from the prior estimate of $1.41 per share, while keeping the 2024 NFFO estimate steady at $1.28 per share.
The completion of this transaction is expected to simplify American Healthcare REIT's business narrative and pave the way for future investments and acquisitions within the Trilogy network. Additionally, the transaction is set to reduce the company's net debt to EBITDA ratio by approximately 0.5x, bringing it to the low-to-mid 5x range.
KeyBanc suggests that with an improved cost of capital and lower leverage, American Healthcare REIT is now in a better position to explore other external growth opportunities.
These opportunities could potentially enhance growth and diversify the company's portfolio, including different operators, geographic locations, and business segments. The price target adjustment to $28 reflects the anticipated accretion from the recent transactions.
In other recent news, American Healthcare REIT has experienced significant developments. The company has launched a public offering of 14.5 million shares of common stock, with the proceeds set to be used for the acquisition of the remaining 24% minority interest in Trilogy Holdings, LLC, and for the repayment of debt under its credit facilities. Additionally, American Healthcare REIT has provided guidance for a 3.3% increase in 2024 Normalized Funds From Operations (FFO) and a significant rise in same-store net operating income (SSNOI) growth for 2024.
Several financial firms have revised their price targets for American Healthcare REIT. Truist Securities increased the price target to $27, reflecting the company's recent equity offering and the anticipated exercise of its Trilogy purchase option. KeyBanc has also raised its price target for the company to $27, while BofA Securities revised its price target from $19 to $27, both maintaining positive ratings.
Analysts from Barclays Capital Inc., JMP Securities, KeyBanc, and RBC Capital Markets have given American Healthcare REIT an Overweight rating, emphasizing the company's strategic positioning in the healthcare real estate market.
Lastly, the company has announced the date for its 2024 annual meeting of stockholders and the deadline for stockholder proposals. These are the recent developments for American Healthcare REIT.
InvestingPro Insights
InvestingPro data and insights provide a deeper dive into American Healthcare REIT, Inc's financial health and market performance. As of the last twelve months ending in Q2 2024, the company's market capitalization stands at $3.47 billion. Despite a negative P/E ratio of -59.07, which signals that the company is not currently profitable, the revenue growth remains positive at 9.24%, indicating potential for future earnings improvements.
InvestingPro Tips highlight that American Healthcare REIT is expected to see net income growth this year, which aligns with the analyst's expectations of accretive transactions. The stock's recent performance has been strong, with a significant return over the last three months of 71.58% and a year-to-date price total return of 92.03%, positioning it near its 52-week high. This could suggest investor confidence in the company's strategic moves, including the acquisition of the remaining interest in Trilogy. However, the stock is currently trading at a high EBIT valuation multiple and is considered overbought according to the RSI, which may indicate caution for potential investors.
For those interested in a comprehensive analysis, InvestingPro offers additional insights on American Healthcare REIT, including more InvestingPro Tips, which can be found at https://www.investing.com/pro/AHR.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.