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Raymond James upgrades Welltower; Robert W. Baird downgrades LaSalle Hotel

Upgrades

A team of Raymond James & Associates Inc. analysts upgraded healthcare real estate investment trusts Welltower Inc. and Sabra Health Care REIT Inc. to "outperform" from "market perform" with respective per-share price targets of $60 and $22.

The analysts said in a May 21 note that the upgrades take into account their opinion that fundamentals within the skilled nursing sector are starting to demonstrate signs of stabilization after multiyear drops, and that negative sentiment seems to be nearing a bottom.

Discontinuations

A team of Stifel Nicolaus & Co. analysts discontinued coverage of New Senior Investment Group, citing a "reallocation of resources."

In a May 18 note, the analysts said the healthcare REIT reported "disappointing" first-quarter results and transitioned its triple-net lease with Holiday Retirement to a managed portfolio. The analysts added that a partial or complete sale of the portfolio is the most likely outcome as the company's cash flows can no longer back its dividend and capital constraints curtail its growth.

Downgrades

Robert W. Baird & Co. Inc. analyst Michael Bellisario downgraded full-service hotel REIT LaSalle Hotel Properties to "neutral" and increased the per-share price target on the company's stock to $33.50.

The analyst said in a May 21 note that private equity giant Blackstone Group LP's $4.8 billion all-cash deal to purchase LaSalle represents full pricing for the REIT, and that given the pricing and Blackstone's lower cost of capital, a topping bid from private equity is highly unlikely.


In the same May 21 note, the Raymond James analysts downgraded HCP Inc. and Healthcare Trust of America Inc. to "market perform" from "outperform."

The downgrades stem from the analysts' belief that HCP's transactions with Brookdale Senior Living Inc. could be delayed into late 2018, as well as from Healthcare Trust's weakened external growth prospects within the medical office building sector.