Brookdale Senior Living (NYSE: BKD) has a ways to go before its turnaround is complete.
At the very earliest, the nation’s largest senior housing provider likely won’t see improvement in its performance until fiscal year 2019, according to RBC Capital Markets Analyst Frank Morgan.
“Given the challenging operating environment and the ‘heavy lifting’ that management’s turnaround plan will require in the coming quarters, we do not anticipate significant multiple expansion in the near term,” Morgan wrote in a note dated July 12.
As of market close on Friday, Brookdale’s share price had fallen 5.57% to $9.49.
Brentwood, Tennessee-based Brookdale has been dealing with operational challenges and deteriorating market value since its 2014 mega-merger with rival Emeritus Corp.
In February, Brookdale ended its year-long strategic review process, and then-President and CEO T. Andrew Smith stepped down. He was replaced by Lucinda Baier, who had been acting as the company’s CFO.
As recently as this past May, Brookdale was still in the “first inning” of its turnaround, Baier told analysts and investors.
The senior housing industry’s recent soft fundamental performance may impede Brookdale’s progress, Morgan suggested.
“Senior housing occupancy continues to deteriorate amid growth in supply,” Morgan wrote. Sector occupancy hit an eight-year low nationwide in the second quarter of 2018.
All the while, Brookdale’s growth strategy could necessitate external capital, which is subject to general market risk, Morgan added.
Written by Mary Kate Nelson