Deutsche Bank is recommending investors buy Metlifecare shares after previously being neutral on the stock.
Last month, Metlifecare lifted it's profit guidance for the year ending this month to between $43 and $46 million, up from a previous forecast of $34-38 million.
Deutsche Bank analyst Stephen Ridgewell said the retirement village operator was well placed for long-term growth of the retirement the industry.
Its forecast was reasonable and gave six reasons to own shares in the company, including that it had a strong balance sheet, with net debt of $59 million dollars, or gearing of just 7 percent, Mr Ridgewell said.
Metlifecare had, after several painful years, improved its performance and was ready to profitably develop new retirement villages, Mr Ridgewell said.
But the report also outlined downsides, including the risk of a broader housing market downturn, the potential for other retirement village operators over-supplying the market next year, and the company poorly executing upcoming projects.
Mr Ridgewell said that was always a risk, based on Metlifecare's previous record of poor performance.
However, he said the development strategy of new management should address some of those risks.
Deutsche Bank predicted the share price would rise from $4.47 currently to about $5.23 in a year.