Investors may still be able to find some upside in the health care sector, in the real estate investment trust (REIT) outfits. Physicians Realty Trust (NYSE: DOC) and Health Care REIT (NYSE: HCN) were both given positive analyst views by the analyst team at Canaccord Genuity, with an upside averaging north of 20% on a total return basis. Canaccord Genuity’s analyst covering health care REITs is Paul Morgan.

On Physicians Realty Trust (NYSE: DOC), Morgan was updating the firm’s model to reflect intra-quarter adjustments after the second quarter earnings season. Morgan said:

Our current 2015 and 2016 normalized FFO/share are $0.94 (down 4 cents, which is due almost entirely to later timing of second quarter acquisitions), and $1.14 (down 2 cents, reflecting an anticipated second half of 2015 unsecured note offering).

He maintained his $18 price target, which continues to reflect a 25% premium to Canaccord’s forward net asset value and incorporating a 7.2% applied cap rate. If you add in the current 5.8% dividend yield, that implied a 12-month total return potential of 21% based upon the prior closing price of $15.58. That is now over 25% implied upside if you consider that Monday’s closing bell price was down 7% at $14.49. This $18 price target is just 43-cents shy of the consensus analyst price target average.

Canaccord Genuity’s Paul Morgan also updated his model on Health Care REIT (NYSE: HCN) after its second quarter earnings. The 2015 and 2016 FFO per share estimates were left unchanged at $4.34 and $4.65, respectively.

The $79 price target was based on the average of 17 times expected 2016 funds from operations and a 25% premium to Mr. Morgan’s forward implied net asset value and mixed with a cap rate of 6.65%. This analyst price target is over $2 higher than the $76.60 consensus analyst price target.

Combined with the current 4.8% dividend yield, the implied total return opportunity over the coming 12 months or so was a potential of 20%. Health Care REIT closed down 3.9% at $65.73, so its total return opportunity is now closer to 25% if things pan out according to Canaccord Genuity’s expectations.

One of these REITs is small, and one is not — Physicians Realty Trust has a market cap of right at $1 billion, and HealthCare REIT has a $23 billion market cap.

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