Ventas Stays Neutral - Analyst Blog

We maintain our Neutral rating on Ventas Inc. (VTR), a leading healthcare real estate investment trust (REIT) with a portfolio of 600 healthcare-related facilities strategically located in 44 states across the U.S. and two Canadian provinces.

Ventas is one of the top-performing healthcare REITs in the U.S., having one of the largest and most diversified portfolios in the healthcare sector with exposure to nearly all types of facilities. The product diversity of the company allows it to capitalize on opportunities in different markets based on individual market dynamics, and provides a hard-to-replicate competitive advantage over its peers.

Ventas is primarily engaged in the business of financing, owning and leasing healthcare-related and senior housing facilities. The company leases some of its owned healthcare facilities to third-party operators under "triple net" leases, under which the tenant pays all taxes, insurance and maintenance for the properties, in addition to rent. Ventas also owns healthcare-related and senior housing facilities that are managed by third-party operators.

The healthcare industry is the single largest industry in the U.S., based on Gross Domestic Product (GDP). Healthcare is also relatively immune to the economic problems faced by office, retail and apartment companies. Consumers will continue to spend on healthcare while cutting out discretionary purchases. Consequently, Ventas business model insulates it from the volatility in the market and offers stability to its earnings.

Ventas currently has a Zacks #3 Rank, which translates into a short-term Hold recommendation and indicates that the stock is expected to perform in line with the overall U.S. equity market for the next 13 months.