UBS anticipates favorable earnings reports from senior housing and skilled nursing REITs this summer, driven by healthy operating fundamentals, strategic acquisitions, muted supply growth, and robust demographic tailwinds as the baby boomer population ages. Analyst Michael Goldsmith has issued ‘buy’ ratings on American Healthcare REIT, Welltower, CareTrust REIT, and Omega Healthcare Investors, raising price targets for American Healthcare REIT and Welltower while maintaining others, citing strong growth prospects and attractive dividend yields across the sector.
Investors can anticipate positive financial reports from senior housing and skilled nursing companies this summer, according to a recent prediction by UBS. Analyst Michael Goldsmith highlighted in a Tuesday note that these real estate investment trusts (REITs), known for their robust dividends, are experiencing healthy operational fundamentals and engaging in significant, value-accretive acquisitions.
Goldsmith pointed to several factors bolstering the sector. "On operations, we believe Senior Housing continued to benefit from muted supply growth and demographic tailwinds," he wrote. He further explained that current rental rates make new development projects largely uneconomic, which is expected to keep future supply limited. The U.S. population is undergoing a significant demographic shift, with the first baby boomers turning 80 this year. Projections indicate that by 2035, the population aged 80 and above will surge to nearly 23 million, up from an estimated 15 million in July 2025.
This growing demand is currently outstripping the construction of new senior housing units, as reported by the National Investment Center for Seniors Housing & Care (NIC). Data from NIC MAP released on Thursday showed occupancy rates nearing 90% in the second quarter. Beyond the favorable supply/demand dynamics, the environment has also proven conducive to acquisitions, Goldsmith noted.
UBS's Buy-Rated Picks
While UBS maintains a bullish outlook on the subsector overall, several names are particularly highlighted. The firm has issued 'buy' ratings on American Healthcare REIT, CareTrust REIT, Omega Healthcare Investors, and Welltower.
- American Healthcare REIT (AHR), with a 1.89% dividend yield, is slated to report its second-quarter results on August 6. Goldsmith views external growth as a primary earnings driver for the company, which manages a portfolio of 325 healthcare properties, including senior housing and skilled nursing facilities. He recently raised his price target on AHR shares from $60 to $63, implying a 17% upside from Thursday's closing price. "AHR recently raised approximately $700 million of equity to fund an awarded SHOP pipeline exceeding $1 billion," Goldsmith stated, suggesting strong confidence in transaction opportunities and acquisition economics with initial yields in the high-5% to low-6% range. He forecasts a 2026 core funds from operations (FFO) of $2.10 per share, surpassing the consensus of $2.07 per share. AHR shares have climbed 13% year-to-date.
- Welltower (WELL) is projected to report earnings on July 27. Goldsmith increased his price target for Welltower to $271 per share from $249, indicating a 17% potential upside. The company boasts a portfolio of over 2,500 senior and wellness housing communities. This revised target reflects Welltower's updated guidance of similar or improved growth trends, an ongoing shift towards more operating assets, a positive meeting with management, and an improvement in the company's cost of capital. Welltower has also enhanced its operating platform, the Welltower Business System. Goldsmith's 2026 core FFO estimate is $6.27 per share, slightly below the consensus of $6.29. Welltower offers a 1.29% dividend yield and has seen its shares rise 24% year-to-date.
- CareTrust REIT, which yields 3.88%, is increasingly benefiting from its expansion into care homes in the U.K., alongside its senior housing portfolio. The company manages 588 properties. While an official earnings date has not been released, it is estimated to be in early August. Goldsmith maintained his price target of $48, representing a 17% upside. He noted, "CTRE remains highly opportunistic across senior housing and is willing to underwrite a wide range of opportunities, from turnarounds to newly developed assets." He anticipates a 2026 core FFO of $2.04 per share, aligning with the consensus estimate. CareTrust REIT shares are up 11% year-to-date.
- Omega Healthcare Investors, with a substantial 5.57% dividend yield, is scheduled to release its earnings results on July 30. Goldsmith maintained his price target of $54 for the company, implying an 11% upside. Omega Healthcare's portfolio, comprising over 1,000 properties, primarily includes skilled nursing and assisted living facilities. He projects a full-year core FFO of $3.25 per share, close to the consensus of $3.26. Omega Healthcare shares have increased 9% year-to-date.
