Welltower Appoints New CEO; Street Is Sidelined

Welltower announced the appointment of Shankh Mitra as its new CEO effective from Oct. 5. The health care REIT (real estate investment trust) also named Kenneth J. Bacon, who had served as an independent director on the board, as the chairman of the company.

Welltower (WELL) said that Mitra will replace Thomas J. DeRosa, who stepped down as chairman and CEO after more than 6 years. The new CEO, Mitra will also serve as chief investment officer and lead Welltower’s data analytics-driven capital allocation and operator relationships.

In separate news, Welltower announced the expansion of its “relationship with leading institutional real estate investors through the sale of three portfolios with a combined valuation of $1.3 billion.” (See WELL stock analysis on TipRanks)

Following the announcements, BMO Capital analyst John Kim said that he is surprised by the timing of Mitra’s appointment, but welcomes his “discipline and execution.” Kim believes that the sudden departure of DeRosa indicates “disappointing earnings ahead, or a potential shift in strategy.”

However, Kim is positive on the company’s “update on asset sales and 3Q20 operations that showed attractive pricing despite weakening fundamentals.” At the same time, the analyst expects challenging housing occupancy recovery in the near-term, and therefore maintains a Hold rating on the stock with a price target of $52 (9.52% downside potential).

Currently, the Street is sidelined on the stock. The Hold analyst consensus is based on 5 Holds, 2 Buys, and 2 Sells. The average price target of $54.13 implies downside potential of about 5.8% to current levels. Shares are down about 29.7% year-to-date.

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