Goldman Sachs Lowering Estimates On Brookdale Senior Living

Goldman Sachs is cutting its earnings estimates on shares of Brookdale Senior Living Inc. BKD, but it still has a Buy rating and a $30 price target on shares. In a note to clients, Goldman Sachs writes, "We lower our 2Q CFFO estimate for Buy-rated leading senior housing operator Brookdale Senior Living but maintain our positive investment view and believe that BKD still offers the most compelling absolute upside in our CRE/REITs coverage. In summary, we still recommend investors buy BKD for 22% upside to our unchanged 12-month price target of $30. Today we lower our 2011 CFFO/share estimate slightly to $2.35 from $2.40 previously. Our estimate remains above consensus in 2011 by $0.05/share but we note two reasons for the adjustment: First, incremental negative economic news over the past few months has negatively impacted the seasonal ramp in occupancy that we normally see in 2Q for senior housing. Our positive long-term view on senior housing demographics remains unchanged and we note that our estimates in 2011-13 do not assume rent spikes (3-4% growth). Second, we now expect the timing for BKD's capital expenditure budget to be more front-end loaded than previously expected and the majority of our 2011 CFFO estimate change is due to a higher proportion of 2Q capital expenditures." Shares of BKD closed at $24.29 yesterday.