Luis Alvarez Mizuho Americas reiterated its Buy rating on Omega Healthcare Investors ( NYSE: OHI ) and kept the stock as a Top Pick after the REIT disclosed on Monday that one of its top tenants filed for Chapter 11 bankruptcy . Mizuho analyst Vikram Malhotra said he expects pressure on the stock in the near-term after tenant LaVie Care Centers filed for bankruptcy after failing to pay contractual rent in the past few quarters. OHI had previously disclosed those issues with LaVie, he noted.
"Over the medium-term, however, we see some silver linings — including higher near-term cash flow (subject to court approval) and eventual positive outcome," he wrote in a note to clients. On Monday, Omega ( OHI ) said it committed $10M to fund 50% of LaVie's expected debtor-in-possession financing to support sufficient liquidity to effectively operate its facilities during bankruptcy. "We continue to believe that there is meaningful value in our portfolio of LaVie assets," Omega ( OHI ) said.
After working with LaVie for more than a year to reduce its exposure to underperforming assets, "we believe the current cash flow generated by our remaining LaVie portfolio is sustainable and will support long-term annualized rent of $36M, while also retaining sufficient cash within the business to provide for strong clinical care," the company added. Omega Healthcare ( OHI ) stock edged up 0.2% i n Tuesday premarket trading.
The SA Quant system and average Wall Street analyst both rate the stock a.
