Why did Cantor Fitzgerald Upgrade Healthcare Realty’s Stock?

By Jason Carr

Cantor Fitzgerald analyst Joseph France upgraded Healthcare Realty (NYSE: HR) to Buy today and set a price target of $35. The company’s shares closed last Friday at $27.97.

France observed:

“2016-2017 outlook. HR reported third quarter NAREIT FFO of $0.39 roughly in-line with our estimate of $0.41 and consensus of $0.40 according to FactSet. Same store revenue increased 4.1% with operating expenses increasing 3.8%. We are lowering our 4Q16 FFO estimate to $0.39 (from $0.43) and lowering full year estimates to $1.58 in 2016 (from $1.65) and to $1.72 in 2017 (from 1.73). Section 603 a positive. CMS’s final proposal on 11/1/16 requires off-campus provider-based departments to both serve and bill from the same physical address they had as of 11/2/2015, in order to qualify as exempt for the site- neutral payment provisions. Special exceptions will be allowed for extraordinary circumstances, such as natural disasters. Approximately 75% of HR’s properties are either on-campus or within 250 yards of a hospital and we expect the new rules, effective 1/1/17, to increase the value of HR’s real estate due to its long history and affiliations with so many large healthcare delivery systems. Investment Activity. HR continues to actively manage its real estate portfolio, closing $144 million in acquisitions four months after its $150 million equity offering to fund investments. In September, HR acquired an 87,000 square foot MOB (Medical Office Building) in Seattle for $53 million and a 104,000 square foot MOB in Washington DC for $45 million. In October, it acquired three additional MOB properties in Baltimore and Seattle for $46 million, bringing its 2016 total acquisition volume to just over $225 million with an average cap rate of 5.6%.”

According to TipRanks.com, France is a 3-star analyst with an average return of 2.1% and a 44.1% success rate. France covers the Healthcare sector, focusing on stocks such as WellCare Health Plans, Envision Healthcare, and Acadia Healthcare.

Healthcare Realty has an analyst consensus of Moderate Buy, with a price target consensus of $35.

Healthcare Realty’s market cap is currently $2.98B and has a P/E ratio of 49.79. The company has a book value ratio of 2.2091.

Based on the recent corporate insider activity of 52 insiders, corporate insider sentiment is positive on the stock. This means that over the past quarter there has been an increase of insiders buying their shares of HR in relation to earlier this year. Earlier this month, David R. Emery, the Chairman of HR bought 68,000 shares for a total of $1,960,440.

Healthcare Realty Trust, Inc. is a publicly-traded Real Estate Investment Trust (REIT). It engages in owning, managing, acquiring, and developing outpatient medical facilities. The company was founded by David R. Emery in 1992 and is headquartered in Nashville, TN.