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Why Is Ventas (VTR) Up 8% Since Last Earnings Report?

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A month has gone by since the last earnings report for Ventas (VTR - Free Report) . Shares have added about 8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Ventas 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' Q3 FFO Surpasses Estimates, Revenues Up Y/Y

Ventas reported third-quarter 2018 normalized FFO of 99 cents, beating the Zacks Consensus Estimate of 97 cents. However, the figure came in lower than the year-ago quarter tally of $1.04.

The company witnessed higher rental income from its office portfolio. Furthermore, same-store cash net operating income (NOI) for its triple net leased portfolio witnessed growth.

Ventas posted revenues of $936.5 million, which beat the Zacks Consensus Estimate of $904.82 million. Further, the revenue figure compares favorably with the year-ago number of $899.9 million.

Quarter in Detail

For the third quarter, same-store cash NOI growth for the total portfolio (1,063 assets) inched up 1.3% year over year. Segment wise, same-store cash NOI for the triple net leased portfolio grew 3%, the office portfolio rose 3.5%, while seniors-housing operating portfolio registered a decline of 2.7%.

During and subsequent to the reported quarter, Ventas made new investments of approximately $100 million. It also made advancement in its university-based life-science development business. Notably, the company unveiled a development at its University of Pennsylvania life-science campus in September, which is nearly 70% leased. It also made new commitments worth $50 million for development and redevelopment projects in its senior housing and office portfolios.

Liquidity

Ventas exited third-quarter 2018 with cash and cash equivalents of $86.1 million, down from $93.6 million as of the prior-quarter end.

Updated 2018 Outlook

Ventas updated its 2018 normalized FFO per share outlook to $4.03-$4.07 from the previous projection of $4.02-$4.07. The 2018 NAREIT FFO is expected in the range of $3.77-$3.83.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

Currently, Ventas has a poor Growth Score of F, however its Momentum Score is doing a lot 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 F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

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




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