Sabra Healthcare REIT Inc . (NASDAQ: NASDAQ:SBRA) saw its price target increase by Mizuho from $18.00 to $20.00, while the firm held onto its Outperform rating for the stock.
The adjustment comes as the analyst recalibrates the adjusted funds from operations (AFFO) estimates for the upcoming years.
The revised AFFO projections are now set at $1.42 for 2024 and $1.51 for 2025. These figures have been slightly adjusted down from the previous estimates of $1.44 and $1.55, respectively.
The modifications to the forecast were attributed to a couple of factors, including the exclusion of a one-time late payment from Signature that was recognized in the second quarter, and an increase in the anticipated capital expenditures.
The analyst provided a rationale for the new price target, explaining that it was based on a 12 times multiple applied to the firm's 2026 AFFO estimate.
The multiple is a standard valuation metric used in the real estate investment trust (REIT) industry to assess a company's stock price relative to its expected cash flow.
Sabra Healthcare REIT specializes in owning properties that serve the healthcare industry, including nursing homes, rehabilitation centers, and other medical facilities.
The company's performance is closely tied to the healthcare sector and is influenced by factors such as property occupancy rates, lease agreements, and the overall demand for healthcare services.
In other recent news, Sabra Healthcare REIT Inc. has seen significant developments. Truist Securities and Mizuho have upgraded their price targets for the company to $18, maintaining positive ratings.
Truist Securities' decision is based on the company's funds from operations (FFO) multiple, while Mizuho cites anticipated growth in the company's adjusted funds from operations (AFFO) leading into fiscal year 2025.
Sabra Healthcare reported a 17.7% increase in cash NOI in the second quarter of 2024, improved occupancy rates in senior housing and skilled nursing facilities, and a quarterly cash dividend of $0.30 per share. The company also raised its full-year 2024 guidance, indicating confidence in continued growth.
The company's investment pipeline is robust, with approximately $0.75 billion of deals under review. Sabra's focus is on small, digestible deals rather than large portfolio acquisitions. The company projects a steady-state portfolio growth of 5% in AFFO per share once the managed portfolio stabilizes.
InvestingPro Insights
Sabra Healthcare REIT's recent performance aligns with Mizuho's optimistic outlook. According to InvestingPro data, the company's revenue growth stands at an impressive 22.99% over the last twelve months as of Q2 2024, with a robust EBITDA growth of 28.51% during the same period. These figures support the analyst's confidence in the company's future performance.
InvestingPro Tips highlight that Sabra has maintained dividend payments for 14 consecutive years, which is particularly relevant for REIT investors seeking stable income. Additionally, the company's stock is trading near its 52-week high, with a strong return of 22% over the last three months, indicating positive market sentiment that corresponds with Mizuho's Outperform rating.
The current dividend yield of 6.51% may be attractive to income-focused investors, especially considering the company's consistent dividend history. It's worth noting that InvestingPro offers 11 additional tips for Sabra Healthcare REIT, providing investors with a more comprehensive analysis of the company's financial health and market position.
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