Morgan Stanley’s Best Overweight & Quality Stocks: Top 25 Stocks

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7. Welltower Inc. (NYSE:WELL)

Number of Hedge Fund Holders In Q2 2024: 32

Average Analyst EPS % Revision: 2.7%

Welltower Inc. (NYSE:WELL) is a specialty real estate investment trust that invests in healthcare properties. The firm’s portfolio includes senior housing, rehabilitation centers, and other facilities. In a real estate sector plagued by high interest rates, Welltower Inc. (NYSE:WELL)’s shares are a standout as they have gained 42% year to date. This has come on the back of strong financial performance. As of H1 2024, $2.8 billion of the REIT’s $3.7 billion in revenue came from its resident fees and services to seniors in its facilities. Crucially, the $2.8 billion figure marked a 22% annual growth over the year ago figures, indicating that Welltower Inc. (NYSE:WELL) is growing its senior care business. Population dynamics are expected to play an important role in the firm’s fortunes as an aging population coupled with a strong market position enable Welltower Inc. (NYSE:WELL) to grow in the future. Morgan Stanley believes that the company’s occupancy rate can touch 87% by 2025 end to drive net income growth.

Baron Funds mentioned Welltower Inc. (NYSE:WELL) in its Q2 2024 investor letter. Here is what the fund said:

“The shares of Welltower Inc. (NYSE:WELL) continued to perform well in the second quarter. Share price appreciation was driven by continued strong cash flow growth in its senior housing portfolio driven by strong occupancy and rent growth, solid execution on its highly accretive proprietarily sourced capital deployment opportunities, and an improved full-year growth outlook.

Welltower is a REIT that is an operator of senior housing, life science, and medical office real estate properties. We recently met with the entire Welltower senior management team and remain encouraged that the shares can continue to be a strong multi-year contributor for the Fund. We are optimistic about the prospects for both cyclical growth (a recovery from depressed occupancy levels following COVID-19) and secular growth (the senior portion of the population is the fastest growing portion of the population and people are living longer) in senior housing demand against a backdrop of muted supply that will lead to several years of compelling organic growth. Welltower is a “best-in-class” operator with a high-quality curated portfolio that is led by astute capital allocators, thereby allowing it to capture outsized organic and inorganic growth opportunities.”

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