On Wednesday, Scotiabank updated its outlook on Sabra Healthcare REIT Inc . (NASDAQ: NASDAQ:SBRA) shares, raising the price target to $15.00, up from the previous $14.00. The firm maintained a Sector Perform rating on the stock.
The adjustment comes as the analyst forecasts a steady fiscal year 2024, with expected funds from operations per share (FFOPS) growth of approximately 5% year over year.
The analyst noted improvements in rent coverage metrics quarter over quarter, excluding Provider Relief Funds. Additionally, the Seniors Housing Managed segment displayed stable results.
Revenue per occupied room (RevPOR) in this segment grew by 3.4%, with an increase to 4.0% in the fourth quarter. The same store occupancy also saw a significant rise, with a year-over-year increase of 190 basis points in the first quarter, outpacing the broader industry's performance as reported by the National Investment Center for Seniors Housing & Care (NIC (NASDAQ:EGOV)).
The updated financial projections for Sabra Healthcare REIT include a rise in FFOPS estimates to $1.37 for 2024 and $1.43 for 2025, up from the previous estimates of $1.36 and $1.41, respectively.
Adjusted funds from operations per share (AFFOPS) estimates were also revised upward to $1.40 for 2024 and $1.46 for 2025, from the prior forecasts of $1.38 and $1.44.
The new price target of $15.00 is based on an 11.0 times multiple of the estimated 2024 AFFOPS, which represents an increase from the previously used 10.0 times multiple. This change reflects a more optimistic valuation of the company's earnings potential.
Sabra Healthcare REIT's stock price target has been adjusted in light of these revised estimates and the observed stability in key operational metrics.
InvestingPro Insights
As Scotiabank updates its outlook on Sabra Healthcare REIT Inc. (NASDAQ: SBRA), real-time data from InvestingPro provides further insights into the company's financial health and market performance. Sabra is expected to see net income growth this year, a positive sign for investors looking for profitability. The company is trading at a lower P/E ratio of 33.47 based on the last twelve months as of Q1 2024, suggesting potential undervaluation relative to near-term earnings growth. Additionally, Sabra's revenue growth over the last twelve months stands at 21.68%, indicating a robust expansion in its financials.
InvestingPro Tips highlight that Sabra not only pays a significant dividend to shareholders, with a current yield of 8.17%, but has also maintained these payments for 14 consecutive years, reinforcing its commitment to returning value to investors. Moreover, the company's liquid assets exceed its short-term obligations, which provides a cushion for operational flexibility and financial stability.
For those seeking more in-depth analysis, InvestingPro offers additional tips on Sabra Healthcare REIT, which can be accessed through the dedicated page: https://www.investing.com/pro/SBRA. Subscribers can utilize the coupon code PRONEWS24 to get an extra 10% off on a yearly or biyearly Pro and Pro+ subscription, unlocking even more investment insights. With a total of 9 additional InvestingPro Tips available, investors can gain a comprehensive understanding of SBRA's market position and future prospects.
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