Ventas' Performance Strong, But Not Enough To Raise Price In Future

On Friday, Ventas, Inc. (NYSE: VTR) reported Q2 FFO at $1.04, in line with estimates and revenues of $848.8 million vs. estimates of $848 million. Shares rose over 40 percent following the report.

Hilliard Lyon's John Roberts downgraded Ventas from Neutral to Underperform after further analysis of the company's earnings conference call and price movement.

Conference Call

Although Roberts appreciated management's life science investment and increased emphasis on development going forward, the Lyon's analyst thought shares reacted too highly to the news.

"When we upgraded the stock, we saw a fair value of $65 2–3 years out, a price level it met much more quickly than we anticipated," stated Roberts.

Migration To Bonds?

In addition to company share prices reaching far above Lyon's $65.00 price target, Roberts feared income-oriented investments such as Ventas may fall out of favor as interest rates rise. "We believe investors may wish to reduce their risk profiles on these types of investments," said the analyst.

At time of writing, Ventas traded at $76.39, up 0.30 percent on the day.

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