03:17 PM EDT, 05/29/2024 (MT Newswires) -- CareTrust REIT's ( CTRE ) elevated valuation offers positives for raising capital countered by the risk of profit-taking in an "unsettled" macro environment, Wedbush said Wednesday in a report.

Growing demand from older generations, outpacing the national average, combined with limited new supply, will potentially drive post-pandemic recovery of occupancy and rent coverage for the company, Wedbush said.

CareTrust's potential growth is fueled by capital-raising advantages and low leverage with $1 billion in debt capacity and a $260 million investment pipeline target, Wedbush said.

"The transaction market for skilled nursing facilities (and senior housing to a lesser degree) already trades at cap

rates that invite an immediate path to accretion or in relatively short order," the report said.

CareTrust has struck a positive balance between internal growth from low single-digit annual rent escalations in its triple-net platform and coverage exceeding industry averages, Wedbush said.

"The stock could be vulnerable to profit-taking if macro conditions move in the wrong direction, as triple-net healthcare

is, by its nature, highly interest rate sensitive," Wedbush said.

Wedbush initiated CareTrust coverage with a neutral rating and $26 price target.

CareTrust shares fell 0.5% in recent trading Wednesday.

Price: 25.09, Change: -0.12, Percent Change: -0.48