As of May 25, 2025, Target Healthcare REIT PLC's estimated intrinsic value ranges from $88.04 to $147.75 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $147.75 | +50.9% |
| Discounted Cash Flow (5Y) | $129.18 | +32.0% |
| Dividend Discount Model (Multi-Stage) | $144.80 | +47.9% |
| Dividend Discount Model (Stable) | $131.16 | +34.0% |
| Earnings Power Value | $88.04 | -10.1% |
Is Target Healthcare REIT PLC (THRL.L) undervalued or overvalued?
With the current market price at $97.90, the stock appears to be significantly undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Target Healthcare REIT PLC's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.59 | 0.63 |
| Cost of equity | 7.5% | 9.4% |
| Cost of debt | 4.0% | 5.2% |
| Tax rate | 0.0% | 0.0% |
| Debt/Equity ratio | 0.39 | 0.39 |
| After-tax WACC | 6.5% | 8.2% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $129 | $1,017M | 75.9% |
| 10-Year Growth | $148 | $1,134M | 57.6% |
| 5-Year EBITDA | $98 | $820M | 70.1% |
| 10-Year EBITDA | $121 | $969M | 50.4% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $55M |
| Discount Rate (WACC) | 8.2% - 6.5% |
| Enterprise Value | $673M - $846M |
| Net Debt | $208M |
| Equity Value | $465M - $638M |
| Outstanding Shares | 6M |
| Fair Value | $74 - $102 |
| Selected Fair Value | $88.04 |
| Metric | Value |
|---|---|
| Market Capitalization | $613M |
| Enterprise Value | $821M |
| Trailing P/E | 8.49 |
| Forward P/E | 8.18 |
| Trailing EV/EBITDA | 12.00 |
| Current Dividend Yield | 581.49% |
| Dividend Growth Rate (5Y) | 4.86% |
| Debt-to-Equity Ratio | 0.39 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $44.32 |
| Discounted Cash Flow (5Y) | 25% | $32.30 |
| Dividend Discount Model (Multi-Stage) | 20% | $28.96 |
| Dividend Discount Model (Stable) | 15% | $19.67 |
| Earnings Power Value | 10% | $8.80 |
| Weighted Average | 100% | $134.06 |
Based on our comprehensive valuation analysis, Target Healthcare REIT PLC's weighted average intrinsic value is $134.06, which is approximately 36.9% above the current market price of $97.90.
Key investment considerations:
Given these factors, we believe Target Healthcare REIT PLC is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.