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BMO Capital Markets upgrades Welltower, reiterates positive stance on Prologis

Upgrades

BMO Capital Markets analyst John Kim upgraded Welltower Inc. to "market perform" from "underperform," and raised his per-share price target on the company's stock to $55 from $54.

Kim said in a May 18 note that the healthcare real estate investment trust's $3.1 billion all-cash deal to purchase peer Quality Care Properties Inc. is likely cash-flow accretive and structured conservatively, while giving the company options regarding improved facility performance over time. The analyst also believes the deal offers Welltower greater flexibility to decrease its exposure to troubled skilled nursing operator Genesis.


Evercore ISI analysts Rich Hightower and Steve Sakwa upgraded Host Hotels & Resorts Inc. and Marriott International Inc. to "outperform" from "in line," and Sunstone Hotel Investors Inc. and Hilton Worldwide Holdings Inc. to "in line" from "underperform," with per-share stock price targets of $23.00, $155.00, $16.50 and $86.00, respectively.

The analysts said their coverage universe now includes three "outperform"-rated and six "in line"-rated names, with no "underperform" ratings. The pair also increased their core operating forecasts for all their covered lodging companies through 2019, and posited that the sector should continue to "work" in this environment.

"We believe that with economic growth improving, interest rates on the rise, and industry supply pressures becoming somewhat more manageable, lodging will for the time being remain a sector favored by investors," the analysts said in a May 17 note.

Reiteration

In a separate May 18 note, BMO Capital Markets analyst R. Jeremy Metz reiterated his "outperform" rating on Prologis Inc. and increased his price target on the industrial REIT's stock to $70 per share.

Metz posited that a favorable operating environment, a balance sheet primed for growth, ample scale and platform advantages supported by advanced data analytics and the strategic $8.4 billion deal to purchase rival DCT Industrial Trust Inc. should provide Prologis with a firm foundation for sustainable earnings, cash flow and dividend increases.

Downgrades

In the same May 17 note, Evercore's Hightower and Sakwa downgraded DiamondRock Hospitality Co. to "in line" from "outperform," with a lower $12-per-share price target.