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Is a Beat in Store for Healthpeak (PEAK) in Q4 Earnings?
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Healthpeak Properties,Inc. is scheduled to report fourth-quarter and 2020 earnings on Feb 9, after market close. While the company’s results will likely reflect growth in revenues, funds from operations (FFO) per share are expected to display a year-over-year decline.
In the last reported quarter, this health real estate investment trust (REIT) reported FFO as adjusted of 40 cents per share, surpassing the Zacks Consensus Estimate of 39 cents. However, higher operating expenses and the dismal performance of its senior housing segment affected results.
Over the preceding four quarters, the company beat the Zacks Consensus Estimate on two occasions and met in the other two, the average beat being 1.21%. The graph below depicts this surprise history:
Healthpeak Properties, Inc. Price and EPS Surprise
Let’s see how things have shaped up prior to the fourth-quarter earnings release.
Factors at Play
NIC-MAP released fourth-quarter 2020 senior housing data that indicates seniors housing occupancy in the December-end quarter declined 130 basis points (bps) sequentially to 80.7%. Occupancy losses also resulted in worsening net absorption. In fact, net absorption was -5.4% during the fourth quarter compared with -3.8% in third-quarter 2020.
Moreover, annual rent growth decelerated to 1.4% during the quarter as compared to 1.7% in third-quarter 2020. Moreover, while the current government support has been helpful for senior housing operators, it was not enough to negate the implications of COVID-19.
As for Healthpeak, we note that 26% of the company’s total portfolio adjusted net operating income or NOI (as of the third-quarter 2020 end) had seniors housing exposure. This exposure means that its fourth-quarter results will reel, owing to occupancy declines and higher operating costs.
In fact, Healthpeak expects total stabilized senior housing operating portfolio (SHOP) occupancy to fall 100-200 basis points (bps) in the fourth quarter, while COVID-related SHOP expenses are projected to be $5 million.
The escalating expenses are likely on account of higher sanitation activities, protective gears and preventive efforts, while occupancy declines are expected to have resulted in revenue erosion in the fourth quarter. In fact, the Zacks Consensus Estimate for SHOP NOI is estimated to be $170 million, indicating a sequential decline of 1.7%.
Nonetheless, Healthpeak has decent investments in life science and medical office assets and these segments are anticipated to have curtailed the massive shock of the senior housing segment and aided top-line growth.
Specifically, the life-science segment is expected to have witnessed decent growth in the fourth quarter amid the increasing need for effective diagnostics, therapies and vaccines to fight the coronavirus pandemic. Moreover, with a recovery in patient volumes, the medical office segment is likely to have witnessed high leasing and tenant retention.
In fact, for 2020, same-store NOI at Healthpeak’s life science segment is projected to be up 5.25-5.75% year over year. Strong leasing, robust mark-to-market and lower-than-expected bad debts have likely driven the increase. Also, same-store NOI for the medical office segment is expected to improve 1.75-2.25% year over year as compared with 1-2% growth mentioned earlier.
Further, total revenues for the fourth quarter are pegged at $596 million, suggesting year-over-year growth of 12.1%.
In fact, prior to the fourth-quarter earnings release, there is a lack of any solid catalyst for becoming optimistic about the company’s prospects. Markedly, the Zacks Consensus Estimate for fourth-quarter FFO per share has been unchanged at 40 cents over the past month. It also suggests a 9.1% year-over-year decline.
For the year, the Zacks Consensus Estimate for FFO per share has been unchanged over the past month at $1.63. The figure also indicates a 7.4% year-over-year decrease on revenue estimate of $2.36 billion.
Here is what our quantitative model predicts:
Healthpeak has the right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of a FFO beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Healthpeak is +4.40%.
Here are a few other stocks in the REIT sector that you may want to consider, as our model shows that these too have the right combination of elements to report a surprise this quarter:
Rexford Industrial Realty, Inc. (REXR - Free Report) , set to report quarterly numbers on Feb 10, currently has an Earnings ESP of +2.13% and a Zacks Rank of 3.
Hudson Pacific Properties, Inc. (HPP - Free Report) , slated to release quarterly earnings on Feb 17, has an Earnings ESP of +0.76% and a Zacks Rank of 3 at present.
WashREIT , slated to release quarterly earnings on Feb 11, has an Earnings ESP of +0.59% and a Zacks Rank of 3 at present.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
Image: Bigstock
Is a Beat in Store for Healthpeak (PEAK) in Q4 Earnings?
Healthpeak Properties, Inc. is scheduled to report fourth-quarter and 2020 earnings on Feb 9, after market close. While the company’s results will likely reflect growth in revenues, funds from operations (FFO) per share are expected to display a year-over-year decline.
In the last reported quarter, this health real estate investment trust (REIT) reported FFO as adjusted of 40 cents per share, surpassing the Zacks Consensus Estimate of 39 cents. However, higher operating expenses and the dismal performance of its senior housing segment affected results.
Over the preceding four quarters, the company beat the Zacks Consensus Estimate on two occasions and met in the other two, the average beat being 1.21%. The graph below depicts this surprise history:
Healthpeak Properties, Inc. Price and EPS Surprise
Healthpeak Properties, Inc. price-eps-surprise | Healthpeak Properties, Inc. Quote
Let’s see how things have shaped up prior to the fourth-quarter earnings release.
Factors at Play
NIC-MAP released fourth-quarter 2020 senior housing data that indicates seniors housing occupancy in the December-end quarter declined 130 basis points (bps) sequentially to 80.7%. Occupancy losses also resulted in worsening net absorption. In fact, net absorption was -5.4% during the fourth quarter compared with -3.8% in third-quarter 2020.
Moreover, annual rent growth decelerated to 1.4% during the quarter as compared to 1.7% in third-quarter 2020. Moreover, while the current government support has been helpful for senior housing operators, it was not enough to negate the implications of COVID-19.
As for Healthpeak, we note that 26% of the company’s total portfolio adjusted net operating income or NOI (as of the third-quarter 2020 end) had seniors housing exposure. This exposure means that its fourth-quarter results will reel, owing to occupancy declines and higher operating costs.
In fact, Healthpeak expects total stabilized senior housing operating portfolio (SHOP) occupancy to fall 100-200 basis points (bps) in the fourth quarter, while COVID-related SHOP expenses are projected to be $5 million.
The escalating expenses are likely on account of higher sanitation activities, protective gears and preventive efforts, while occupancy declines are expected to have resulted in revenue erosion in the fourth quarter. In fact, the Zacks Consensus Estimate for SHOP NOI is estimated to be $170 million, indicating a sequential decline of 1.7%.
Nonetheless, Healthpeak has decent investments in life science and medical office assets and these segments are anticipated to have curtailed the massive shock of the senior housing segment and aided top-line growth.
Specifically, the life-science segment is expected to have witnessed decent growth in the fourth quarter amid the increasing need for effective diagnostics, therapies and vaccines to fight the coronavirus pandemic. Moreover, with a recovery in patient volumes, the medical office segment is likely to have witnessed high leasing and tenant retention.
In fact, for 2020, same-store NOI at Healthpeak’s life science segment is projected to be up 5.25-5.75% year over year. Strong leasing, robust mark-to-market and lower-than-expected bad debts have likely driven the increase. Also, same-store NOI for the medical office segment is expected to improve 1.75-2.25% year over year as compared with 1-2% growth mentioned earlier.
Further, total revenues for the fourth quarter are pegged at $596 million, suggesting year-over-year growth of 12.1%.
In fact, prior to the fourth-quarter earnings release, there is a lack of any solid catalyst for becoming optimistic about the company’s prospects. Markedly, the Zacks Consensus Estimate for fourth-quarter FFO per share has been unchanged at 40 cents over the past month. It also suggests a 9.1% year-over-year decline.
For the year, the Zacks Consensus Estimate for FFO per share has been unchanged over the past month at $1.63. The figure also indicates a 7.4% year-over-year decrease on revenue estimate of $2.36 billion.
Here is what our quantitative model predicts:
Healthpeak has the right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of a FFO beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Healthpeak is +4.40%.
Zacks Rank: It currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Stocks That Warrant a Look
Here are a few other stocks in the REIT sector that you may want to consider, as our model shows that these too have the right combination of elements to report a surprise this quarter:
Rexford Industrial Realty, Inc. (REXR - Free Report) , set to report quarterly numbers on Feb 10, currently has an Earnings ESP of +2.13% and a Zacks Rank of 3.
Hudson Pacific Properties, Inc. (HPP - Free Report) , slated to release quarterly earnings on Feb 17, has an Earnings ESP of +0.76% and a Zacks Rank of 3 at present.
WashREIT , slated to release quarterly earnings on Feb 11, has an Earnings ESP of +0.59% and a Zacks Rank of 3 at present.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>