If you’re interested in gaining some exposure to the healthcare sector, then you may want to look at Healthco Healthcare and Wellness REIT (ASX: HCW) shares.
It is the latest addition to the Goldman Sachs conviction list with a buy rating and $2.56 price target.
This implies potential upside of ~15.5% for Healthco Healthcare and Wellness REIT shares over the next 12 months.
And with Goldman forecasting an attractive 3.3% dividend yield, the potential return stretches to almost 19%.
What is the Healthco Healthcare and Wellness REIT?
Healthco Healthcare and Wellness REIT owns a portfolio of healthcare and wellness assets predominantly on the eastern seaboard states.
Goldman Sachs believes it provides a good mix of defence plus offense given the external growth runway. In respect to defence, the broker notes that it has a weighted average lease expiry of ~9.4 years and strong tenant covenants in sub-sectors that are majority government-backed.
Whereas on the offense, the broker notes that the healthcare real estate sector in Australia is in its infancy, providing scope for a large runway for growth through acquisitions and ground up development.
Another reason Goldman is positive is its exposure to sub-sector mega trends.
It commented: “We believe the opportunity set for healthcare related assets is expansive and is underpinned by key mega trends within Australia: 1) Australia’s ageing population, 2) growing government expenditure, 3) technological improvements, and 4) the increasing consumption of health-related services. The company estimates an additional ~A$87bn of investment into healthcare property will be needed over the next 20 years, adding to the current ~A$218bn asset base.”
“We initiate coverage with a Buy (add to CL), given HCW’s strong balance sheet, attractive industry fundamentals and runway for external growth in its portfolio,” it concluded.