Shares of Health Care REIT Inc. (HCN) touched a new 52-week high of $71.76 on Monday, Apr 15, 2013, as it gained momentum following an upgrade of the company’s rating by Standard & Poor’s Ratings Services. The closing price of this healthcare real estate investment trust (REIT) on Apr 15, 2013 was $70.31, representing asolid year-to-date return of 16.4%. The average trading volume over the last 3 months was 1.91 million shares.
Factors Driving Momentum
On Apr 4, Health Care REIT received a rating upgrade from Standard & Poor’s Ratings Services. Consequently, the company now enjoys a corporate credit rating to BBB from BBB- with a stable outlook. The rating upgrade came on the back of Health Care REIT’s diversified and quality portfolio. Moreover, the rating agency acknowledged the company’s capacity to produce a stable cash flow as well as improve its credit metrics. This plays a major role in preserving investor confidence in the stock and helps boost its creditworthiness in the market.
Being one of the largest and oldest healthcare REITs in the U.S., the company boasts a strong portfolio of senior housing, long-term care and medical office facilities. Moreover, the completion of the acquisition of Sunrise Senior Living facility during the fourth quarter of 2012 boosted the company’s high-quality senior housing portfolio and extended its reach in the high-barriers-to-entry affluent markets.
However, Health Care REIT’s fourth-quarter results were not very encouraging. On Feb 25, the company reported fourth-quarter results with normalized FFO (funds from operations) of 85 cents per share, in line with the Zacks Consensus Estimate. However, this was lower than the year-ago FFO of 91 cents. The decrease in year-over-year FFO per share was primarily attributable to increased number of outstanding shares in the reported quarter. For full-year 2012, the company’s normalized FFO came in at $3.52 per share, exceeding the Zacks Consensus Estimate by 3 cents and was significantly ahead of the year-ago figure of $3.41.
Health Care REIT is scheduled to report its first-quarter 2013 earnings on May 7. The company currently carries a Zacks Rank #4 (Sell) and has an earnings ESP (Read: Zacks Earnings ESP: A Better Method) of 0.00%. Thus we are not sure about an earnings beat when it reports its first-quarter results.
Estimate Revisions
Over the last 30 days, the Zacks Consensus Estimate for full-year 2013 has remained unchanged at $3.81 per share. On the other hand, the Zacks Consensus Estimate for full-year 2014 has marginally moved down to $4.02 per share.
Of late, a number of REITs crafted 52-week highs. They include DCT Industrial Trust Inc. (DCT), Federal Realty Investment Trust (FRT) and CBRE Group Inc. (CBG).
Note: Funds from operations, a widely accepted and reported measure of REITs performance, are derived by adding depreciation, amortization and other non-cash expenses to net income.
CBRE GROUP INC (CBG): Free Stock Analysis Report
DCT INDUSTRIAL (DCT): Free Stock Analysis Report
FED RLTY INV (FRT): Free Stock Analysis Report
HEALTH CR REIT (HCN): Free Stock Analysis Report
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