Omega Healthcare upgraded on decreased share price

Analyst lifts Omega Healthcare to 'Buy' on price, predicts tenants won't miss rent payments

• On 11:54 am EDT, Monday October 12, 2009

NEW YORK (AP) -- An analyst for Stifel Nicolaus upgraded shares of Omega Healthcare Investors Inc. on Monday, saying the stock is attractively priced and the company's tenants are not likely to default.

Analyst Jerry Doctrow upgraded the real estate investment trust to "Buy" from "Hold," and set a target price of $17, which represents potential upside of 11.5 percent over its closing price Friday.

Doctrow said Omega Healthcare shares are inexpensive compared to rival stocks, and despite impending cuts in Medicare reimbursement, tenants will still be able to pay their rents.

Omega Healthcare shares are down about 20 percent from their 2009 highs. Doctrow said investors are concerned about decreased reimbursement rates for the skilled nursing companies that occupy most of the company's properties. The analyst said Medicare rates will fall in 2010 and state Medicaid rates will be no better than flat, but it is unlikely those reimbursement cuts will prevent the occupants from paying rent.

In morning trading, shares of the Hunt Valley, Md., company rose 52 cents, or 3.4 percent, to $15.77.