Welltower Stock Gains 24.1% in Six Months: Will it Continue to Rise?
Shares of Welltower WELL have gained 24.1% in the past six months, outperforming the industry's upside of 5.7%.
Welltower boasts a well-diversified portfolio of healthcare real estate assets in the key markets of the United States, Canada and the U.K. Given an aging population and an expected rise in senior citizens' healthcare expenditure, the company's senior housing operating (SHO) segment is well-poised to benefit from this positive trend. The outpatient medical (OM) portfolio is expected to benefit from favorable outpatient visit trends in the near term.
Analysts seem positive on this healthcare REIT, currently carrying a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for its 2025 funds from operations (FFO) per share has been revised three cents northward to $5.02 over the past month.
Image Source: Zacks Investment Research
Let us decipher the possible factors behind the surge in the stock price.
The senior citizens' population is expected to rise in the years ahead. As a result, the national healthcare expenditure by senior citizens, who constitute a major customer base of healthcare services and incur higher healthcare expenditures than the average population, is likely to increase in the upcoming period. Muted new supply has also been a tailwind for this industry. Capitalizing on these positive aspects, WELL's SHO portfolio is well-prepared for compelling multiyear revenue growth. For 2025, management anticipates the same-store SHO net operating income to grow within 16.5-21.5%.
Historically, there has been a favorable outpatient visit trend compared with inpatient admissions. Banking on this, the company is optimizing its OM portfolio, growing relationships with health system partners and deploying capital in strategic acquisitions. Given the favorable secular trends and growing need for value-based care, the company's efforts to strengthen its OM footprint will boost long-term growth.
Welltower has been actively banking on its growth opportunities through acquisitions. In March 2025, Welltower announced that it is under contract to acquire the Amica Senior Lifestyles portfolio from Ontario Teachers' Pension Plan for C$4.6 billion. The deal, subject to customary regulatory approvals, is expected to close in late 2025 or early 2026. The company has also been disposing of assets simultaneously. In the first quarter of 2025, Welltower completed pro rata property dispositions of $381 million and loan repayments of $123 million.
Welltower has a healthy balance sheet position and ample liquidity to meet near-term obligations and fund its development pipeline. As of March 31, 2025, it had $8.6 billion of available liquidity, including $3.6 billion of cash & restricted cash and full capacity under its $5 billion line of credit. As of March 31, 2025, the net debt to adjusted EBITDA was 3.33X, improving from 4.03X year over year. Moreover, Welltower's debt maturities are well-laddered, with a weighted average maturity of 5.8 years, thereby enhancing its financial flexibility.
With the above-mentioned factors, we believe the rising trend in the stock is expected to continue in the near term.
A competitive landscape in the senior housing market and tenant concentration in its triple-net portfolio are likely to weigh on Welltower.
Some better-ranked stocks from the broader REIT sector are VICI Properties VICI and Medical Properties Trust MPW, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for VICI's 2025 FFO per share has moved one cent northward to $2.34 over the past two months.
The Zacks Consensus Estimate for MPW's 2025 FFO per share has moved one cent northward to 57 cents over the past month.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.
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This article originally published on Zacks Investment Research (zacks.com).
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