Current trading levels reflect minimal occupancy and rate growth improvement given investor concerns with the integration of the company's merger with senior living company Emeritus Corporation, and the pending supply of new units coming online in 2016, the firm said.
"Given the continued operational issues and lack of visibility on a positive inflection point, the stock has had a difficult time finding support as existing holders cut their losses," JMP said in an analyst note.
The Brentwood, TN-based company operates senior living communities in the U.S.
Despite the price target cut, shares of Brookdale Senior Living closed up by 0.28% to $18.02 on Tuesday.
Separately, recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate BROOKDALE SENIOR LIVING INC as a Sell with a ratings score of D+. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Health Care Providers & Services industry. The net income has significantly decreased by 85.1% when compared to the same quarter one year ago, falling from -$36.86 million to -$68.22 million.
- The debt-to-equity ratio is very high at 2.47 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.38, which clearly demonstrates the inability to cover short-term cash needs.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Health Care Providers & Services industry and the overall market, BROOKDALE SENIOR LIVING INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for BROOKDALE SENIOR LIVING INC is rather low; currently it is at 21.30%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -5.50% trails that of the industry average.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 48.67%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 60.86% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- You can view the full analysis from the report here: BKD