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UPDATE: S&P Capital Downgrades Brookdale Senior Living On Valuation

Dwight Einhorn

In a report published Thursday, S&P Capital analyst Jeffrey Loo downgraded the rating on Brookdale Senior Living (NYSE: BKD) from Buy to Hold, but reiterated the $35.00 price target.

In the report, S&P Capital noted, “Our downgrade is based on valuation as BKD's shares have risen close to our $35 target price, which equates to a 14.0X enterprise value-to-EBITDA, at the high end of BKD's five-year historical trading range. But we keep our positive long-term outlook on BKD's occupancy rates driven by an aging population and demand for its supporting services.

"We also expect BKD to grow and capture more market share via acquisitions. But we expect near-term results to be impacted by Medicare reimbursement pressure and we see continued housing volatility and pressure on some ancillary services.”

Brookdale Senior Living closed on Wednesday at $33.71.

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