This senior living stock is a buy with more than 30% upside: Jefferies

The senior housing industry is approaching its “golden age” and Brookdale Senior Living should benefit, according to Jefferies. Analyst Brian Tanquilut initiated coverage of Brookdale Senior Living with a buy rating, saying the sector should benefit from better occupancy as baby boomers “age into the sweet spot.” “The combination of positive demographic trends, improved operations, and financial engineering … should all translate to improved earnings performance that’s not yet baked into the stock,” he wrote. Along with the upgrade, Tanquilut established an $8 price target, reflecting 32% upside from Tuesday’s close. The stock is up more than 4% this year. BKD YTD mountain Shares since the start of 2024 The firm expects Brookdale to experience heightened demand that should help accelerate earnings as many boomers approach their late 70s. A slowdown in new construction due to Covid-19 pandemic delays and higher costs should also benefit shares. “As demand re-accelerates due to demographics, it will take years to get capacity growing again, which means that existing players stand to see increased occupancy in the near- to med-term,” Tanquilut wrote. “As occupancy picks up, margin leverage should emerge for scaled players such as BKD.” Tanquilut views upcoming lease renewals as a potential catalyst for shares, while the acquisition of once-leased communities should boost margins. He also sees the stock rallying as much as 65% as part of a bull case scenario that includes quicker-than-expected margin expansion and occupancy recovery. Brookdale is not widely followed by analysts, with only four covering it. Of those, two have buy ratings, and the others assigned it an underperform rating, LSEG data shows.