Analyst Denese Newton of Stifel Nicolaus maintained a Buy rating on Target Healthcare REIT (THRL – Research Report), retaining the price target of p90.00.
Denese Newton has given his Buy rating due to a combination of factors that highlight the strong performance and potential of Target Healthcare REIT. The company’s portfolio is fully let with inflation-linked leases to financially stable tenants, ensuring a high rent collection rate of 98% and a rent cover of 1.9 times. This stability is further supported by a 2.6% increase in adjusted EPRA earnings per share and a 3.0% growth in dividends, which are comfortably covered by earnings at 107%.
Additionally, Target Healthcare REIT benefits from positive demographic trends and a significant proportion of private pay, positioning it well to outperform the broader care home market. The company’s standing assets delivered a total return of 10.8% for the 2024 calendar year, significantly outperforming the MSCI Healthcare Index. Despite recent outperformance in the sector, the 6.5% dividend yield remains attractive, supporting the Buy rating. The portfolio’s high quality, with 84% of properties built post-2010, and stable shareholder returns further reinforce the positive outlook.