Analyst Note| Kevin Brown |
While we believe that we have yet to see the worst of the coronavirus' effect on the senior housing industry, the overall impact has been far more muted than we had originally feared. As a result, we have increased our short-term outlook for the healthcare REITs and therefore raised our fair value estimates to $32.50 per share from $30.50 for Healthpeak, to $55 per share from $50 for Ventas, and to $74 per share from $73 for Welltower. Additionally, we are improving our uncertainty rating for all three companies to medium from high as the current trajectory of occupancy declines in the senior housing industry makes an industrywide collapse far less likely. All three companies currently trade at significant discounts to our fair value estimates, and we believe that investors looking for long-term growth as the industry recovers should consider adding any of the healthcare REITs to their portfolio.