WELL
Welltower Inc.
$214.23
Real Estate Investment Trust
85%
P/FFO × Healthcare REIT Multiple
Strong
·
Conviction
Overvalued
Trading 55.7% above fair value
You pay
$214.23
Bear
$109.42
Fair
$137.60
Bull
$165.78
Bear
$109.42
-48.9%
$4.36 FFO × 18x
Fair
$137.60
-35.8%
$4.36 FFO × 23x
Bull
$165.78
-22.6%
$4.36 FFO × 29x
Key Value Driver
FFO/share ($4.36) × healthcare P/FFO multiple
Implied Market Multiple
49.2x
Summary
Our base-case estimate uses P/FFO × Healthcare REIT Multiple. We then blend that result with the average analyst price target of $239.11 from 34 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $137.60 per share.
Warnings
Standard profit figures are misleading for real estate companies — large non-cash accounting charges make profits look artificially low. Dividend yield and funds from operations are better measures.
The 1.4% yield is low for a real estate company — investors are paying up because they expect above-average growth.
Wall Street's average price target is $239.11 (from 34 analysts). Our estimate is 61% below the consensus -- consider that gap carefully.
Key Risks
- P/E and EV/EBITDA are structurally wrong for REITs — use P/FFO and NAV
- Interest rate sensitivity: REIT multiples compress when rates rise
- FFO approximation (NI + D&A) may include gains on property sales — verify