Michael Goldsmith, an analyst from UBS, has initiated a new Hold rating on Sabra Healthcare REIT (SBRA).
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Michael Goldsmith has given his Hold rating due to a combination of factors influencing Sabra Healthcare REIT’s current market position. The company benefits from favorable demographic trends and a strong skilled nursing facility backdrop, which are already reflected in its share price. However, Sabra’s strategy of acquiring senior housing operating properties in secondary markets is seen as less effective, and its cost of capital limits the profitability of these investments.
Additionally, Sabra’s organic growth metrics in its senior housing operations lag behind industry peers, with lower occupancy and revenue growth rates. The company’s earnings growth has been negative compared to its peers, and its shares trade at a discount to the broader REIT sector. To improve its outlook, Sabra would need to demonstrate better operating metrics, a more sustainable acquisition strategy, and a reduced cost of capital. Despite these challenges, the current valuation of Sabra’s shares is considered balanced, justifying the Hold rating.
In another report released on November 6, Scotiabank also maintained a Hold rating on the stock with a $20.00 price target.