Will Health Care REIT (HCN) Stock Be Affected By Its Public Offering?

NEW YORK (TheStreet) -- Shares of Health Care REIT Inc. (HCN) are down -3.41% to $62.23 on Wednesday.

The real estate investment trust, which has a portfolio that includes a range of senior housing and health care real estate, announced today it has priced its public offering of 14 million shares of common stock at $62.35 per share.

The company upped its original offering of $12 million shares.

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Underwriters have been granted an option to purchase an additional 2,100,000 shares over the next 30 days, Health Care REIT said.

Estimated gross proceeds from the offering will be $873 million, or $1 billion if the underwriter option is "exercised in full" the company said.

TheStreet Ratings team rates HEALTH CARE REIT INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate HEALTH CARE REIT INC (HCN) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations, impressive record of earnings per share growth and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 10.1%. Since the same quarter one year prior, revenues rose by 26.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has increased to $258.66 million or 29.45% when compared to the same quarter last year. In addition, HEALTH CARE REIT INC has also modestly surpassed the industry average cash flow growth rate of 27.25%.
  • HEALTH CARE REIT INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, HEALTH CARE REIT INC reported lower earnings of $0.09 versus $0.46 in the prior year. This year, the market expects an improvement in earnings ($0.80 versus $0.09).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, HEALTH CARE REIT INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The change in net income from the same quarter one year ago has exceeded that of the Real Estate Investment Trusts (REITs) industry average, but is less than that of the S&P 500. The net income has decreased by 7.4% when compared to the same quarter one year ago, dropping from $71.66 million to $66.38 million.
  • You can view the full analysis from the report here: HCN Ratings Report
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