Diversified Healthcare Trust (DHC) has set out a fresh course with three linked moves: large non core property sales, full repayment of its 2026 notes, and a broad reset of senior housing operations.

Those asset sales, debt repayment and senior housing changes arrive after a sharp shift in investor sentiment, with the share price at US$5.40 and a 90 day share price return of 33.33%, alongside a very large 3 year total shareholder return that sits around 6x the starting point. This suggests recent momentum is building on a longer recovery story.

If this kind of reset in a healthcare REIT has caught your eye, it can be useful to see what else is out there across healthcare stocks.

With the share price close to the US$5.75 analyst target and intrinsic value screens showing a premium, the key question is whether recent gains leave limited upside or whether markets are still underestimating future growth potential.

Most Popular Narrative: 2.9% Overvalued

With the narrative fair value at US$5.25 against a last close of US$5.40, the current pricing sits slightly above that framework and puts the spotlight on the growth and margin story behind it.

Active portfolio repositioning, executing non-core asset sales and focusing on higher growth senior housing and medical office/life science properties, enables the company to concentrate capital on assets with sector tailwinds (strong demand for outpatient care settings) and embedded rent growth, supporting long-term revenue and FFO growth.

Curious how slow revenue growth, a shift from losses toward healthy margins, and a low future P/E all combine into this fair value? The full narrative sets it out.

Result: Fair Value of $5.25 (OVERVALUED)

However, there are still pressure points, including high leverage and reliance on asset sales, that could affect margins and challenge the current fair value narrative.

Build Your Own Diversified Healthcare Trust Narrative

If you look at the numbers and come to a different conclusion, or just prefer to test your own view against the data, you can build a complete narrative in a few minutes with Do it your way.

A great starting point for your Diversified Healthcare Trust research is our analysis highlighting 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.