New Welltower Price Target as Pricing Power Kicks in

Following our initial comments about Welltower’s (WELL) Q2 2026 results, we are lifting our price target to $265 from $230.

While some may react to the size of that adjustment, in recent weeks we’ve shared that we were overdue to revisit our WELL price target and aimed to do some catching up with it following the company’s Q2 2026 results. The decision for the size of our target increase lies in comments from the management team that an increasing share of its senior housing portfolio is crossing the 90% and 95% occupancy thresholds, which is where pricing power really kicks. That suggests that as occupancy growth continues, we should see an acceleration in revenue per occupied growth with that trickling down to margins and the bottom-line.

However, not all of that pricing benefit will be captured near-term as Welltower continues to ramp occupancy in newer locations and at recently acquired operations. During the quarter, Welltower completed more than $30 transactions across 138 communities for $6.2 billion during the quarter as it continues to grow its footprint. Over time as things properties are folded into the Welltower systems, we should see occupancy levels rise followed by improving pricing and revenue per room over time. That tells us that while Welltower is guideline its year over year, same-store net operating income (NOI) growth in the range of 18.% to 21.5% for this year, we should see another double-digit figure in 2027

As the company continues to lean further into the senior housing market, one that is powered by a strong demographic tailwind, Welltower’s revenue and profits should continue to rise over time. Fueling that pipeline, Welltower management targets $6 billion in incremental investment activity to close later this year, which equates to something between 600 and 700 properties, up from more than 240 last year, and against its 2,500 footprint.

This tells us that while we should see further pricing and margin improvement in 2027, we should see even more in 2028. That along with the continued winding down of the remaining outpatient medical portfolio, which is a slower grower and lower margin business, we should see more of the strengths tied to the senior housing business shine through.

As we lift our WELL price target, there are a few things that we are keeping our eyes on. First, is the ability to properly staff its facilities given immigration policies and labor. While Welltower focuses on the high-end senior housing market, which should help insulate it to some degree, the ability to attract and retain caregivers remains critical. Second, as Welltower looks to grow its asset base and shift its mix further toward senior housing, a move we like, the topic of interest rates and borrowing costs to fund those transactions and bring those properties up to Welltower standards is the other.

In terms of our Two rating, WELL shares can be rather choppy at times and some of that can be traced back to our second item to watch discussed above. Should we see WELL shares pull back toward support near $223, that is when we may start to reconsider that Two rating.

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At the time of publication, TheStreet Pro was long WELL.