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Ventas: Impressive 3Q Results Propel Stock to 52-Week High

Zacks Equity Research

Shares of Ventas Inc. (VTR) soared to a new 52-week high of $69.93 on Monday, Nov 24, as it gained momentum on better-than-expected third-quarter results. The closing price of this real estate investment trust (:REIT) on same day was $69.73, representing a solid year-to-date return of 27%. The average trading volume has been around 1.77 million shares over the last 3 months.

Despite hitting a 52-week high, this Zacks Rank #3 (Hold) stock has plenty of upside left given strong estimate revisions following the earnings release.

Growth Drivers

Strong third-quarter results, an improved operating portfolio, and a healthy liquidity position drove the company’s stock price to the new high.

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On Oct 24, Ventas reported third-quarter normalized funds from operations (:FFO) of $1.12 per share, nearly 1% ahead of the Zacks Consensus Estimate of $1.11 thanks to growth in revenues and accretive investments. The bottom line also improved 8% from $1.04 a year-ago. The company has also increased its full-year 2014 normalized FFO per share outlook.

Going forward, we believe Ventas will benefit from its diversified portfolio, increasing health care spending, aging population and a rise in insured individuals in the U.S. Further, strategic acquisitions and decent cash flows would add momentum to the company’s growth.

Estimate Revisions Show Potency

Echoing similar sentiments, the Zacks Consensus Estimate over the last 30 days climbed 0.5% to $4.46 per share for 2014, while that for 2015 advanced 0.4% to $4.67.

In addition to Ventas, a number of other REITs hit a 52-week high yesterday. These include Jones Lang LaSalle Inc. (JLL), Health Care REIT, Inc. (HCN) and Apartment Investment and Management Co (AIV).

Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

Read the Full Research Report on JLL
Read the Full Research Report on AIV
Read the Full Research Report on VTR
Read the Full Research Report on HCN


Zacks Investment Research