BMO Capital Markets analyst Juan C. Sanabria upgraded National Health Investors, Inc. (NYSE:NHI) from Market Perform to Outperform, maintaining the price forecast of $67.
Sanabria sees the potential for multiple expansions for the company, with upside to earnings driven primarily by SHOP and acquisitions.
Acquisitions also represent an opportunity with $150 million of debt firepower, given National Health Investors' low leverage (4.4X net debt/EBITDA).
The analyst keeps a more constructive stance on the company's SHOP portfolio given the recent strong 4Q23 occupancy and a solid start to '24 despite typical seasonal trends.
Sanabria forecasts FY24 SHOP same-store net operating income growth of +30% y/y (guidance 25-30%), above peer's guidance.
The midpoint of the company's SSNOI guidance conservatively implies only +1.8% growth off fourth quarter 2023 annualized levels, the analyst adds.
After a quiet 2023, Sanabria sees acquisitions picking up amidst financial distress, which aren't assumed in guidance.
Overall, the company has a conservative balance sheet, an expanding acquisition opportunity set and a solid management team with an operational background.
The analyst writes that senior housing tenant issues have been addressed, major SNF tenants remain well-positioned, while SHOP has finally turned the corner and risks are fading.
Price Action: NHI shares are trading higher by 0.74% to $59.44 on the last check Tuesday.
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