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Ventas (VTR) Up 11.8% Since Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Ventas, Inc. (VTR - Free Report) . Shares have added about 11.8% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is VTR due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Ventas' Q1 FFO Misses Estimates, Revenues Surpass

Ventas reported first-quarter 2018 FFO of 96 cents, missing the Zacks Consensus Estimate of $1.01. The figure came in lower than the year-ago quarter tally of $1.03.

Results reflected an increase in property-level operating expenses.

However, the company posted revenues of $943.7 million in the first quarter, comfortably beating the Zacks Consensus Estimate of $850.6 million. Further, it compared favorably with the year-ago number of $883.4 million.

For the first quarter, same-store cash net operating income (NOI) growth for the total portfolio (1,049 assets) was 2.6% year over year. Segment-wise, same-store cash NOI for the triple-net leased portfolio grew 4.4%, seniors-housing operating portfolio witnessed rise of 0.7% and the same for medical office building portfolio increased 2.2%.

Quarter in Detail

During the reported quarter, Ventas signed a mutually-beneficial agreement with Brookdale Senior living, which currently operates the company’s 128 wholly-owned senior-housing communities. It combines all of the company’s leases with Brookdale into a single Master lease, with an initial term through December 2025. Brookdale has two 10-year extension options as well.

Moreover, Brookdale and Ventas plan to sell a few properties from the Brookdale portfolio, totaling $30 million in cash rent.

Liquidity

Ventas exited first-quarter 2018 with cash and cash equivalents of $92.5 million, up from $81.4 million as of Dec 31, 2017.

2018 Outlook

The company expects the FFO to be in the band of $3.76-$3.84 from the previous guidance of $3.80-$3.89. Further, Ventas updated 2018 normalized FFO per share outlook to $3.99-$4.07 from the previous range of $3.95-$4.05.

The company updated same-store cash NOI growth to 0.5-1.5% in 2018 from 0.5-2% issued earlier.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. There have been two revisions higher for the current quarter compared to one lower.

Ventas, Inc. Price and Consensus

VGM Scores

At this time, VTR has a subpar Growth Score of D, however its Momentum is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for momentum based on our styles scores.

Outlook

Estimates have been broadly trending upward for the stock and the magnitude of these revisions looks promising. Notably, VTR has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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