Sector Wrap: Assisted living center operators

As housing prices continue to fall and sales stagnate, many retirees are choosing to remain in their homes rather than sell for a meager profit or even at a loss. This has meant fewer aging baby boomers are moving into assisted living communities.

Seattle-based Emeritus Corp., which provides assisted living and Alzheimers and related dementia care services, late Thursday reported a first-quarter loss that more than doubled to $26 million, or 67 cents per share, on revenue of $186.5 million.

Analysts had expected a smaller loss of 55 cents per share on higher revenue of $191 million. The company also lowered its revenue outlook for 2008 to a range of $760 million to $775 million from prior estimates of $780 million to $795 million.

Stifel Nicolaus analyst Jerry Doctrow said Emeritus warned that move-ins remain flat in the second quarter and that expansions and development will drag on occupancy. Shares of the Seattle-based company fell $1.92, or 8 percent, to $22.10 in afternoon trading on triple average volume.

Meanwhile, Jefferies analyst Frank G. Morgan thinks Sunrise Senior Living Inc.'s preliminary quarterly results were "quite impressive," given recent industry headwinds and weak reports from other senior living providers.

"While strong rate growth was largely responsible for the increase in the top-line, occupancy was relatively stable in what has been a tough quarter for the company's peers," Morgan wrote. Sunrise said Thursday it has not seen any impact on move-in activity or attrition related to the economic slowdown, and indicated that it currently has 40 development projects under construction and another 100 under contract.

Shares of McLean, Va.-based Sunrise slipped 9 cents to $23.07.

Goldman analyst Jonathan Habermann said Brookdale Senior Living posted solid quarterly results Wednesday despite soft housing markets. But he maintained a "Neutral" rating and $24 price target on the stock, believing that Brookdale's cash flow growth may moderate slightly in the near-term due to the slowing economy and higher integration expenses in the first half of the year.

"That said, the supply and demand dynamics for senior housing remain favorable longer-term in our view and we believe that BKD is well-positioned as the largest senior housing operator," Habermann wrote in a note to clients.