Sabra Healthcare REIT, Inc.
SBRA
$22.03
+0.23%
Sabra Healthcare REIT, Inc. is a real estate investment trust that owns and invests in healthcare facilities across the United States, primarily nursing facilities, assisted living centers, and mental health properties. As a specialized healthcare REIT, Sabra distinguishes itself through a focused portfolio of triple-net leased properties, providing stable cash flows from long-term operator relationships. The current investor narrative centers on the company's improving occupancy trends and rent collections post-pandemic, with recent quarterly results showing revenue growth of 16.2% year-over-year, while the stock has gained 11.2% over the past year, reflecting renewed confidence in the healthcare real estate sector.…
SBRA
Sabra Healthcare REIT, Inc.
$22.03
Related headlines
Investment Opinion: Should I buy SBRA Today?
Rating: Hold. Sabra Healthcare REIT offers a compelling dividend yield and accelerating revenue growth, but the premium valuation and margin pressures limit upside potential. The analyst consensus is 'Buy' with an average target of $21.93, implying 9.0% upside, which is modest for a stock trading near its 52-week high.
Supporting evidence: Revenue grew 16.2% YoY in Q4 2025, outpacing the industry average. The trailing P/E of 29.6x is above the industry average of 22x, but the forward P/E of 27.1x suggests expected earnings growth. Free cash flow of $87.4 million in Q4 2025 comfortably covers the dividend. The dividend yield of 6.33% is attractive for income investors. However, the net margin declined to 12.8% from 25.6% a year ago, and the payout ratio on net income is 186%, indicating reliance on cash flow.
Risks & Conditions: The Hold rating could upgrade to Buy if the P/E compresses below 25x or if revenue growth sustains above 15% with margin stabilization. It would downgrade to Sell if interest rates rise sharply, causing multiple compression, or if free cash flow deteriorates, threatening the dividend. Overall, Sabra is fairly valued relative to its history but overvalued relative to peers, making it a hold for current shareholders and a cautious buy for new investors seeking income.
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SBRA 12-Month Price Forecast
Sabra Healthcare REIT offers a high dividend yield and strong revenue growth, but the premium valuation and margin pressures create a balanced risk/reward profile. The base case of moderate growth and stable valuation is most likely, with the stock trading near the analyst average target. Upside catalysts include continued occupancy improvement and rate cuts, while downside risks include rising rates and operator defaults. The neutral stance reflects the limited upside to the average target and the potential for multiple compression. An upgrade to bullish would require evidence of margin stabilization and sustained revenue growth above 15%, while a downgrade to bearish would follow a dividend cut or significant operator defaults.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Sabra Healthcare REIT, Inc.'s 12-month outlook, with a consensus price target around $22.50 and implied upside of +2.1% versus the current price.
Average Target
$22.50
0 analysts
Implied Upside
+2.1%
vs. current price
Analyst Count
—
covering this stock
Price Range
$19 - $25
Analyst target range
Sabra is covered by 14 analysts, with a consensus recommendation of 'Buy' and a mean recommendation score of 2.38 (where 1 is Strong Buy and 5 is Sell). The average price target is $21.93, implying approximately 9.0% upside from the current price of $20.11. The distribution shows 6 Buy ratings, 5 Hold, and 3 Sell, indicating a moderately bullish consensus. The target price range spans from a low of $19.00 to a high of $25.00. The high target of $25.00 assumes continued occupancy improvement and accretive acquisitions, while the low target of $19.00 reflects risks from operator defaults or rising interest rates. Recent ratings actions have been stable, with no major upgrades or downgrades in the past six months. The relatively tight spread between the low and high targets ($6.00) suggests moderate conviction among analysts, though the 9% upside to the average target indicates limited near-term appreciation potential.
Bulls vs Bears: SBRA Investment Factors
Sabra Healthcare REIT presents a mixed picture: strong revenue growth and free cash flow generation support a high dividend yield, but valuation is stretched relative to peers and margins are under pressure. The bull case rests on continued operational improvement and stable interest rates, while the bear case highlights valuation risk and margin compression. The single most important tension is whether the company can sustain its revenue growth trajectory and stabilize margins to justify the premium P/E. Currently, the evidence slightly favors the bull case given the accelerating revenue and strong cash flow, but the premium valuation warrants caution.
Bullish
- Accelerating Revenue Growth: Q4 2025 revenue grew 16.2% year-over-year to $211.9 million, a significant acceleration from 2.4% growth in Q4 2024. This indicates strong operational momentum driven by rent escalations and new investments.
- Strong Free Cash Flow Generation: Q4 2025 free cash flow was $87.4 million, comfortably covering the dividend payout of $74.8 million. Trailing twelve-month free cash flow of $348.6 million provides a solid cushion for distributions and growth.
- Attractive Dividend Yield: The dividend yield is 6.33%, well above the S&P 500 average and appealing for income-focused investors. The payout ratio of 186% on net income is high, but free cash flow coverage is adequate.
- Low Volatility Profile: With a beta of 0.63, Sabra is significantly less volatile than the broader market, making it a defensive holding in a portfolio. This is attractive for risk-averse investors seeking stable income.
Bearish
- Premium Valuation vs. Peers: The trailing P/E of 29.6x is 35% above the healthcare REIT industry average of 22x. This premium leaves little room for error and could compress if growth disappoints.
- Declining Profitability Margins: Gross margin fell from 67.2% in Q4 2024 to 62.0% in Q4 2025, and net margin dropped from 25.6% to 12.8% due to higher interest expenses. This trend could pressure earnings if not reversed.
- High Payout Ratio on Net Income: The payout ratio of 186% on net income indicates the dividend is not fully covered by earnings, relying on free cash flow. Any deterioration in cash flow could force a dividend cut.
- Limited Near-Term Upside: The average analyst target of $21.93 implies only 9.0% upside, and the low target of $19.00 suggests potential downside. The stock is near the top of its 52-week range, limiting near-term appreciation.
SBRA Technical Analysis
Sabra's stock is in a sustained uptrend over the past year, with a 1-year price change of +11.2%. The current price of $20.11 sits at 82.5% of its 52-week range ($17.17 low to $21.28 high), indicating the stock is trading closer to the upper end of its range. This positioning suggests positive momentum but also implies that the stock may be approaching overbought territory, warranting caution for new entries. The 1-month price change of +11.4% significantly outpaces the 3-month change of -2.8%, highlighting a sharp recent recovery after a pullback. This divergence between short-term strength and medium-term weakness could signal a potential trend reversal or a temporary bounce within a broader consolidation. The stock's relative strength versus the S&P 500 over 1 month is +11.1%, confirming strong recent outperformance. Key technical support lies near the 52-week low of $17.17, while resistance is at the 52-week high of $21.28. A breakout above $21.28 would signal a resumption of the uptrend, targeting new highs, while a breakdown below $17.17 could indicate a bearish reversal. With a beta of 0.63, Sabra is significantly less volatile than the broader market, making it a lower-risk holding for income-oriented portfolios.
Beta
0.63
0.63x market volatility
Max Drawdown
-16.6%
Largest decline past year
52-Week Range
$17-$23
Price range past year
Annual Return
+19.6%
Cumulative gain past year
| Period | SBRA Return | S&P 500 |
|---|---|---|
| 1m | +18.3% | +0.6% |
| 3m | +9.7% | +3.4% |
| 6m | +17.1% | +7.1% |
| 1y | +19.6% | +16.4% |
| ytd | +15.0% | +8.3% |
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SBRA Fundamental Analysis
Sabra's revenue trajectory is accelerating, with Q4 2025 revenue of $211.9 million representing 16.2% year-over-year growth, up from 2.4% growth in Q4 2024. The trailing twelve-month revenue reached approximately $774.6 million, driven by rent escalations and new investments. The company's net income for Q4 2025 was $27.2 million, a sharp improvement from $46.7 million in Q4 2024, though the prior year included a one-time gain. Gross margin for Q4 2025 was 62.0%, slightly down from 67.2% in Q4 2024, reflecting higher property costs. Operating margin remained healthy at 30.5%, indicating stable core profitability. Sabra is profitable with a net margin of 12.8% in Q4 2025, though this is down from 25.6% in Q4 2024 due to higher interest expenses. The company's return on equity (ROE) stands at 5.5%, while return on assets (ROA) is 3.1%, both modest but consistent with a capital-intensive REIT model. The balance sheet shows a debt-to-equity ratio of 0.90, indicating moderate leverage. Free cash flow for Q4 2025 was $87.4 million, providing ample coverage for the dividend payout of $74.8 million. The current ratio of 0.56 suggests potential liquidity constraints, but as a REIT with stable rental income, this is less concerning. Overall, Sabra generates sufficient cash flow to fund operations and dividends without relying on external financing.
Quarterly Revenue
$211902000.0B
2025-12
Revenue YoY Growth
+16.2%
YoY Comparison
Gross Margin
62.1%
Latest Quarter
Free Cash Flow
$348613000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is SBRA Overvalued?
Since Sabra has positive net income, we use the P/E ratio as the primary valuation metric. The trailing P/E is 29.6x, while the forward P/E is 27.1x, implying the market expects earnings growth of about 9% over the next year. The gap between trailing and forward P/E suggests modest growth expectations are already priced in. Compared to the healthcare REIT industry average P/E of approximately 22x, Sabra trades at a 35% premium. This premium may be justified by its superior revenue growth (16.2% YoY) and stable occupancy rates, but it also leaves less room for error. Historically, Sabra's trailing P/E has ranged from 21x to 48x over the past two years. The current 29.6x is near the lower end of that range, suggesting the stock is not overvalued relative to its own history. However, the P/E has compressed from 43x in Q4 2025, indicating that earnings growth has outpaced price appreciation, making the stock more attractive on a relative basis.
PE
29.6x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 17x~50x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
15.4x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks: Sabra's debt-to-equity ratio of 0.90 indicates moderate leverage, but interest expense of $28.9 million in Q4 2025 consumed a significant portion of operating income ($64.6 million). The current ratio of 0.56 suggests potential liquidity constraints, though as a REIT with stable rental income, this is less concerning. The net margin declined from 25.6% in Q4 2024 to 12.8% in Q4 2025, driven by higher interest costs, which could pressure earnings if rates remain elevated. Revenue concentration in nursing facilities and assisted living centers exposes the company to operator defaults and regulatory changes in healthcare reimbursement.
Market & Competitive Risks: The stock trades at a 35% premium to the healthcare REIT industry average P/E of 22x, making it vulnerable to multiple compression if growth slows. With a beta of 0.63, the stock is less correlated to the market, but it is still sensitive to interest rate movements. The 52-week high of $21.28 is only 5.8% above the current price, limiting upside potential. The short ratio of 6.85 days suggests elevated bearish sentiment, which could lead to volatility if negative news emerges.
Worst-Case Scenario: A combination of rising interest rates, operator defaults, and margin compression could drive the stock to its 52-week low of $17.17, representing a 14.6% decline from the current price of $20.11. In a severe recession, the stock could fall further to the analyst low target of $19.00, a 5.5% decline, or even below the 52-week low if fundamentals deteriorate. The maximum drawdown over the past year was -16.65%, indicating a potential loss of up to 16.7% from the current price in an adverse scenario.
FAQ
The primary risks are: 1) Valuation risk: the P/E of 29.6x is a 35% premium to the industry average, making the stock vulnerable to multiple compression if growth slows. 2) Interest rate risk: as a REIT, higher rates increase borrowing costs (interest expense was $28.9 million in Q4 2025) and can depress valuations. 3) Dividend risk: the payout ratio on net income is 186%, meaning the dividend is not fully covered by earnings, though free cash flow provides coverage. 4) Operational risk: operator defaults or regulatory changes in healthcare could reduce rental income. The most severe risk is a dividend cut, which could lead to a sharp sell-off.
The 12-month forecast is balanced across three scenarios. The base case (50% probability) sees the stock trading near the analyst average target of $21.93, offering 9% upside, driven by moderate revenue growth and stable margins. The bull case (25% probability) targets $25.00 (24.3% upside) if occupancy improves and interest rates decline. The bear case (25% probability) sees the stock falling to $17.17 (14.6% downside) if rates rise or operator defaults increase. The most likely scenario is the base case, assuming continued revenue growth and stable interest rates. Investors should monitor earnings and interest rate developments for signs of which scenario is unfolding.
SBRA's trailing P/E of 29.6x is 35% above the healthcare REIT industry average of 22x, suggesting it is overvalued relative to peers. However, its forward P/E of 27.1x implies expected earnings growth of about 9%, which partially justifies the premium. Historically, the stock's P/E has ranged from 21x to 48x over the past two years, and the current 29.6x is near the lower end, indicating it is not overvalued relative to its own history. The market is pricing in continued revenue growth and stable occupancy, but any disappointment could lead to multiple compression. Overall, SBRA is fairly valued on a historical basis but overvalued compared to the industry.
SBRA offers a compelling dividend yield of 6.33% and has shown strong revenue growth of 16.2% YoY, but the stock trades at a premium P/E of 29.6x versus the industry average of 22x. The analyst consensus is 'Buy' with an average target of $21.93, implying 9.0% upside, which is modest. The biggest downside risk is a dividend cut if free cash flow deteriorates, though current coverage is adequate. For income-focused investors with a long-term horizon, SBRA can be a good buy at current levels, but growth-oriented investors may find better opportunities elsewhere. It is not a good buy for those seeking rapid capital appreciation.
SBRA is best suited for long-term investment due to its high dividend yield (6.33%) and low beta (0.63), which provide stable income and lower volatility. The stock's growth is moderate, with revenue growing at 16.2% YoY, but capital appreciation is limited by the premium valuation. Short-term trading is less attractive given the modest upside to the average target (9%) and the stock's position near the top of its 52-week range. A minimum holding period of 3-5 years is recommended to capture the dividend income and benefit from potential multiple expansion if growth sustains. For short-term traders, the low volatility and limited upside make it less appealing.