Ahead of the Bell: Ventas downgraded to 'Neutral'

Ventas downgraded to 'Neutral,' analyst cites run-up in stock price, lower dividend yield

Associated Press

NEW YORK (AP) -- Shares of Ventas Inc. slipped in premarket trading Tuesday after an analyst downgraded shares of the health care real estate investment trust, citing a run-up in the company's stock.

Michael Bilerman of Citi Investment Research said he continues to like the strategy of Ventas, which invests in a portfolio of higher-growth assets like senior housing and more secure ones such as medical offices.

"We believe that management will be disciplined in making future acquisitions, though would not be surprised to see deals in areas of health care relatively new to the company such as hospitals and lab space, as well as further penetration in existing asset classes," the analyst wrote.

However, the stock is up more than 18 percent in the year to date and hit an all-time high of $77.88 last week, versus a gain of just under 9 percent in the benchmark S&P 500 index of large-cap stocks.

The analyst noted that Ventas — which recently raised its quarterly dividend by a nickel to 67 cents — now has a dividend yield of about 3.5 percent, below its REIT peers and making it less attractive to investors who buy stocks for the dividend payouts.

He lifted his price target on the Chicago company to $74 from $65.

In premarket trading, Ventas shares traded at $76.43, down 20 cents.

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