Shares of Health Care REIT Inc. (HCN) achieved a new 52-week high of $76.42 in the early hours of the trading session on May 14. The closing price of this real estate investment trust (:REIT) was $76.00, reflecting a solid year-to-date return of 27.2%. The average trading volume of the session was over 2.18 million shares.
However, considering the estimate revision trends over the last 30 days, we believe that this upside is not likely in the near term for this Zacks Ranks #3 (Hold) stock.
Factors to Consider
Better-than-expected first-quarter 2013 results – including an earnings surprise of 1.11% and consistent overall portfolio performance – as well as successful completion of the Sunrise Senior Living facility acquisition were the key growth drivers for Health Care REIT.
Moreover, the healthcare sector is relatively immune to the downturn in the economy, and provides a steady source of income that insulates the company from short-term market volatility. Hence, with decent fundamentals, the stock has an expected year-over-year FFO (funds from operations) growth of 7.41% for 2013. However, a large portion of its revenues originate from a few tenants, which exposes it to concentration risks, and partly undermines its growth potential.
On May 7, Health Care REIT reported first-quarter 2013 normalized FFO of 91 cents per share, a cent ahead of the Zacks Consensus Estimate and up 4 cents year over year. The increase in year-over-year FFO per share was primarily attributable to better-than-expected revenue growth. The company also registered decent same-store NOI growth and asset value appreciation.
Notably, Health Care REIT has delivered positive earnings surprises in the last 4 consecutive quarters with an average beat of 1.42%.
Over the last 30 days, the Zacks Consensus Estimate for full-year 2013 FFO per share moved down 0.5% to $3.78. On the other hand, for 2014 FFO, the Zacks Consensus Estimate moved up 1.0% to $4.05 per share.
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.
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