Wells Fargo cuts rating on Omega Healthcare to 'equal-weight'

Wells Fargo cuts rating on healthcare real estate investment trust Omega Healthcare Investors OHI.N to "equal-weight" from "overweight"

Cuts target price to $39 for $41, representing ~3% upside to stock's last close

REITs that own skilled nursing facilities (SNFs) have been under pressure this year as Republican agenda to extend the Tax Cuts and Jobs Act has resulted in the need to find significant offsetting expenditure reductions for the federal government

Wells Fargo says it is concerned that OHI will face "the greatest credit risk" as there will be a reduction in provider taxes for OHI, further straining SNFs financially and potentially reducing the quality of care provided

Still, brokerage says its Medicaid analysis has given a "sense of comfort that expected policy changes won't be too impactful to most of the SNFs"

Seven of 17 brokerages rate the stock "buy" or higher, 10 "hold"; median PT is $41 - data compiled by LSEG

Up to last close, OHI shares have risen 22.4% in the past 12 months