Welltower (WELL) AI Stock Analysis

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Welltower

(NYSE:WELL)

78Outperform

Welltower's strong financial performance and positive earnings call outlook drive the overall score. The technical indicators suggest strong momentum but caution due to overbought conditions. Valuation appears high, which could limit upside potential. Recent corporate events support the company's growth strategy.

Positive Factors

Expansion Strategy

WELL continues to execute on external growth with significant acquisitions, indicating a strong strategy for expansion.

Financial Performance

Welltower (WELL) reported 4Q FFO 0.9% higher than the Street and provided an initial guidance midpoint for 2025 that is 1.7% above the Street.

Market Positioning

Pricing power in Senior Housing remains solid despite tough comparisons, indicating strong market positioning.

Negative Factors

Investment Risks

The acquisition of NorthStar Healthcare Income in an all-cash transaction valued at $900 million will contribute to expanding the total addressable market of US senior housing assets without diluting core growth.

Market Risks

There is $515 million in embedded NOI growth expected as occupancy returns to pre-COVID levels, with additional upside possible if occupancy exceeds those levels.

Welltower (WELL) vs. S&P 500 (SPY)

Market Cap

$92.51B

Dividend Yield1.84%

Average Volume (3M)3.73M

Price to Earnings (P/E)173.1

Beta (1Y)0.52

Revenue Growth20.40%

EPS Growth57.80%

CountryUS

Employees685

SectorReal Estate

Sector Strength71

IndustryREIT - Healthcare Facilities

Share Statistics

EPS (TTM)0.82

Shares Outstanding648,417,240

10 Day Avg. Volume3,918,630

30 Day Avg. Volume3,731,495

Financial Highlights & Ratios

PEG Ratio2.99

Price to Book (P/B)N/A

Price to Sales (P/S)11.76

Price to Cash Flow (P/CF)42.00

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$160.90

Price Target Upside12.78% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering12

Welltower Business Overview & Revenue Model

Company DescriptionWelltower Inc. (NYSE:WELL), an S&P 500 company headquartered in Toledo, Ohio, is driving the transformation of health care infrastructure. The Company invests with leading seniors housing operators, post-acute providers and health systems to fund the real estate infrastructure needed to scale innovative care delivery models and improve people's wellness and overall health care experience. Welltower, a real estate investment trust (REIT), owns interests in properties concentrated in major, high-growth markets in the United States, Canada and the United Kingdom, consisting of seniors housing and post-acute communities and outpatient medical properties.

How the Company Makes MoneyWelltower makes money primarily through the acquisition, ownership, and management of healthcare real estate properties. Its revenue streams include rental income from leasing properties to healthcare operators and facilities, as well as potential capital gains from the sale of properties. The company often enters long-term lease agreements with healthcare systems and operators, which provides a stable and predictable cash flow. Welltower's strategic partnerships with leading healthcare providers and its focus on high-demand sectors such as senior housing and medical office buildings contribute significantly to its earnings. Additionally, Welltower may earn revenue through property development and redevelopment projects, enhancing the value of its portfolio over time.

Welltower Financial Statement Overview

Summary

Welltower has demonstrated strong revenue growth and profitability, with a stable balance sheet and robust cash flow generation. Financial stability has improved, though there's potential to enhance shareholder returns and optimize investment strategies.

Income Statement

Very Positive

Welltower has demonstrated strong revenue growth with a positive trajectory from 2019 to 2024. The gross profit margin is robust and consistent, indicating efficient management of operational costs. The net profit margin has improved, reflecting enhanced profitability, though there was a dip in EBIT over the years. Overall, the company's revenue growth and profitability are commendable.

Balance Sheet

Positive

The balance sheet shows a healthy equity position with an increasing equity ratio, signifying financial stability and low leverage. The debt-to-equity ratio has improved due to a reduction in total debt, enhancing the company's financial flexibility. However, the return on equity is moderate, suggesting room for improvement in generating returns for shareholders.

Cash Flow

Positive

The cash flow statement highlights solid operating cash flow generation, which supports the company's capital expenditures and dividends. Free cash flow has grown over the years, reflecting efficient cash management. The operating cash flow to net income ratio is robust, indicating efficient conversion of earnings to cash. Despite some fluctuations in investing cash flow, the overall cash flow position is strong.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
7.85B	6.63B	5.86B	4.74B	4.61B
	Gross Profit
3.02B	2.68B	2.30B	1.97B	2.01B
	EBIT
972.86M	1.12B	729.10M	754.25M	676.54M
	EBITDA
2.73B	2.40B	2.01B	1.70B	1.52B
	Net Income Common Stockholders
527.14M	340.09M	141.21M	162.04M	-41.52M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
3.51B	1.99B	631.68M	269.26M	1.55B
	Total Assets
51.04B	44.01B	37.89B	34.91B	32.48B
	Total Debt
2.34B	16.12B	14.96B	14.68B	14.22B
	Net Debt
-1.17B	14.13B	14.33B	14.41B	12.67B
	Total Liabilities
18.47B	17.64B	16.50B	15.91B	15.26B
	Stockholders Equity
31.96B	25.40B	20.29B	17.64B	15.97B
Cash Flow		Free Cash Flow
2.26B	1.55B	1.30B	1.26B	1.35B
	Operating Cash Flow
2.26B	1.60B	1.33B	1.28B	1.36B
	Investing Cash Flow
-5.51B	-5.71B	-3.70B	-4.52B	2.35B
	Financing Cash Flow
4.91B	5.45B	2.76B	1.57B	-2.08B

Welltower Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price142.67

Price Trends

50DMA

147.48

Negative

100DMA

138.86

Positive

200DMA

129.30

Positive

Market Momentum

MACD

1.67

Negative

RSI

62.09

Neutral

STOCH

92.60

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WELL, the sentiment is Neutral. The current price of 142.67 is below the 20-day moving average (MA) of 147.65, below the 50-day MA of 147.48, and above the 200-day MA of 129.30, indicating a neutral trend. The MACD of 1.67 indicates Negative momentum. The RSI at 62.09 is Neutral, neither overbought nor oversold. The STOCH value of 92.60 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for WELL.

Welltower Risk Analysis

Welltower disclosed 45 risk factors in its most recent earnings report. Welltower reported the most risks in the “Legal & Regulatory” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Welltower Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CTRE	79 Outperform	$5.27B	34.95	5.76%	4.29%	36.06%	61.55%
WELL	78 Outperform	$92.51B	173.08	3.32%	1.84%	20.40%	57.80%
OHI	74 Outperform	$10.67B	25.19	10.02%	7.08%	9.90%	56.41%
DOC	68 Neutral	$12.94B	50.64	3.29%	6.63%	23.82%	-37.59%
VTR	63 Neutral	$29.70B	339.20	0.80%	2.77%	9.48%	―
Sector *	61 Neutral	$4.24B	15.87	-3.65%	12.20%	6.29%	-21.37%
HR	53 Neutral	$5.40B	―	-10.95%	8.05%	-5.62%	-140.10%

* Real Estate Sector Average

Performance Comparison

WELL

Welltower

142.67

55.45

63.57%

DOC

Healthpeak Properties

18.16

0.92

5.34%

OHI

Omega Healthcare

37.85

9.67

34.32%

VTR

Ventas

66.11

25.14

61.36%

Healthcare Realty Trust

15.40

2.50

19.38%

CTRE

CareTrust REIT

28.07

5.52

24.48%

Welltower Earnings Call Summary

Earnings Call Date: Feb 11, 2025 | % Change Since: -0.06% | Next Earnings Date: Apr 28, 2025

Earnings Call Sentiment Positive

The earnings call reflects a strong positive outlook for Welltower with record growth in their senior housing operating portfolio and significant acquisition activity. Challenges are noted in the U.S. commercial real estate debt market and higher expenses in the U.K., but these are offset by the company's operational improvements and financial performance.

Highlights

Record Growth in Senior Housing Operating Portfolio

The senior housing operating portfolio achieved nearly 24% same-store NOI growth, marking the ninth consecutive quarter of net operating income growth exceeding 20%. Sequential occupancy growth was 120 basis points, defying typical seasonal trends.

Strong Financial Performance

Welltower reported a 17.7% year-over-year growth in normalized funds from operations, with a 23% revenue growth, 26% EBITDA growth, and nearly 20% FFO per share growth for the full year 2024.

Significant Acquisition Activity

Closed $2.2 billion of transactions in Q4 2024, with a robust pipeline of $2 billion of acquisitions already under contract in 2025, demonstrating strong market position and efficient deal-making capabilities.

Operational Improvements and Margin Expansion

Achieved a 460 basis points spread between RevPAR and unit expense, the highest in recorded history, resulting in a 320 basis points expansion in operating margins for the senior housing portfolio.

Enhanced Balance Sheet and Liquidity

Net debt to adjusted EBITDA reduced to 3.5 times, with $9 billion of liquidity available, and a strong balance sheet allowing for first calls from market participants.

Lowlights

Challenges in U.S. Commercial Real Estate Debt Market

The U.S. commercial real estate debt market faces significant headwinds with substantial maturities in 2025, totaling $1 trillion, and regional banks experiencing high loan modifications and stock performance challenges.

Higher Operating Expenses in U.K. Market

Increased employment taxes and minimum wage in the U.K. are causing higher operating expense growth compared to the U.S., although it is partially offset by strong top-line growth.

Company Guidance

During the Welltower Fourth Quarter 2024 Earnings Conference Call, the company provided optimistic guidance for 2025, highlighting several key metrics and achievements. The company reported a strong 18% year-over-year increase in normalized FFO per share, driven by its senior housing operating portfolio, which saw a 24% same-store NOI growth. Notably, Welltower achieved a 23% revenue growth and a 26% EBITDA growth for the full year of 2024. The SHARP portfolio reported a sequential same-store occupancy growth of 120 basis points in Q4 and 310 basis points year over year, marking a significant milestone as occupancy grew during the typically slow holiday season. Looking ahead, Welltower expects further occupancy growth in 2025, driven by favorable market conditions and strategic capital deployment. The company completed $2.2 billion in transactions during the fourth quarter and anticipates robust investment activity, with $2 billion already under contract in early 2025. Additionally, Welltower noted ongoing improvements in operating margins, achieving a 320 basis point expansion, and expects further enhancements supported by its operating platform build-out.

Welltower Corporate Events

Executive/Board ChangesBusiness Operations and Strategy

Welltower Announces Executive Promotions and Leadership Changes

Positive

Jan 2, 2025

Welltower Inc. announced several executive promotions, highlighting its commitment to long-term growth and internal talent development. The appointments of Nikhil Chaudhri and Tim McHugh as Co-Presidents, along with other leadership changes, are expected to bolster Welltower’s operational capabilities and enhance its positioning within the healthcare real estate sector, aligning with its strategic goals for future expansion and success.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.