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Key Factors to Impact Boston Properties' (BXP) Q2 Earnings
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Boston Properties, Inc. (BXP - Free Report) is slated to report second-quarter 2022 results on Jul 26, after market close. BXP’s quarterly results are likely to reflect year-over-year growth in both funds from operations (FFO) per share and revenues.
In the last reported quarter, this office real-estate investment trust (REIT) delivered a surprise of 4.60% in terms of FFO per share. BXP’s performance during the quarter reflected decent growth in lease revenues, strong leasing activity and occupancy gains in the in-service portfolio.
Over the preceding four quarters, Boston Properties’ FFO per share surpassed the Zacks Consensus Estimate on each occasion, the average beat being 3.79%. This is depicted in the graph below:
Per a Cushman & Wakefield (CWK - Free Report) report, after the health crisis, the U.S. office market started witnessing signs of recovery in the first quarter. For the second quarter, the report highlights that the recovery has not been consistent across the United States. Although office-using employment increased 1.9% in the first half of 2022, the office absorption rate has been negative in the last eight out of nine quarters. For second-quarter 2022, the U.S. office sector witnessed a negative net absorption of 7.8 million square feet (msf).
On the brighter side, a survey by Cushman & Wakefield shows that the life sciences markets, large and small Sunbelt markets and tech-adjacent markets have shown signs of recovery in the second quarter.
Moreover, there has been a rebound in gross leasing activity, and the four-quarter rolling total leasing is more than 360 msf for the second consecutive quarter. Although there has been improvement in gross leasing, it remains lower than the three-year lead up to the pandemic, wherein the four-quarter rolling leasing averaged 395 msf in 2017-2019.
With a portfolio of modern, class A office buildings in Boston, Los Angeles, New York, Seattle, San Francisco and Washington, DC, Boston Properties is expected to have benefited from the improving office real-estate market during the second quarter. The preference for its premium buildings by office tenants is likely to have aided its second-quarter results.
Further, the drug research and innovation business has continued to experience solid growth due to the need for effective diagnostics, therapies and vaccines. This has increased demand for BXP’s life-science assets, which are anticipated to have witnessed solid growth during the quarter to be reported.
Boston Properties is focused on expansions. In May, it acquired Madison Centre, a 37-story, Class A office property in Seattle’s Downtown area for a gross purchase price of roughly $730 million. With a wide array of client-focused amenities and superior accessibility to public and private transit options, BXP’s latest acquisition seems to be a suitable choice for tenants.
The Zacks Consensus Estimate for second-quarter revenues is pegged at $720.2 million, suggesting growth of 5.3% from the prior-year quarter’s reading. In addition, the consensus estimate for quarterly parking and other revenues is pegged at $24.02 million, implying a 31.4% increase from the year-ago period’s reported number.
Moreover, prior to the second-quarter earnings release, analysts seem optimistic about BXP’s prospects. The Zacks Consensus Estimate for the quarterly FFO per share has been revised 1.1% upward to $1.85 over the past two months, suggesting an increase of 7.6% from the prior-year period’s reported figure.
Earnings Whispers
Our proven model does not conclusively predict an FFO beat for Boston Properties this time. The right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — increases the odds of an FFO beat. However, that is not the case here.
Earnings ESP: Boston Properties has an Earnings ESP of -0.54%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are some stocks that are worth considering from the REIT sector as our model shows that these have the right combination of elements to deliver a surprise this reporting cycle:
SBA Communications (SBAC - Free Report) is slated to release second-quarter earnings on Aug 1. SBAC has an Earnings ESP of +1.40% and a Zacks Rank of 3 at present.
Essex Property Trust (ESS - Free Report) is scheduled to report quarterly figures on Jul 26. ESS has an Earnings ESP of +1.21% and a Zacks Rank of 2 currently.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Key Factors to Impact Boston Properties' (BXP) Q2 Earnings
Boston Properties, Inc. (BXP - Free Report) is slated to report second-quarter 2022 results on Jul 26, after market close. BXP’s quarterly results are likely to reflect year-over-year growth in both funds from operations (FFO) per share and revenues.
In the last reported quarter, this office real-estate investment trust (REIT) delivered a surprise of 4.60% in terms of FFO per share. BXP’s performance during the quarter reflected decent growth in lease revenues, strong leasing activity and occupancy gains in the in-service portfolio.
Over the preceding four quarters, Boston Properties’ FFO per share surpassed the Zacks Consensus Estimate on each occasion, the average beat being 3.79%. This is depicted in the graph below:
Boston Properties, Inc. Price and EPS Surprise
Boston Properties, Inc. price-eps-surprise | Boston Properties, Inc. Quote
Factors at Play
Per a Cushman & Wakefield (CWK - Free Report) report, after the health crisis, the U.S. office market started witnessing signs of recovery in the first quarter. For the second quarter, the report highlights that the recovery has not been consistent across the United States. Although office-using employment increased 1.9% in the first half of 2022, the office absorption rate has been negative in the last eight out of nine quarters. For second-quarter 2022, the U.S. office sector witnessed a negative net absorption of 7.8 million square feet (msf).
On the brighter side, a survey by Cushman & Wakefield shows that the life sciences markets, large and small Sunbelt markets and tech-adjacent markets have shown signs of recovery in the second quarter.
Moreover, there has been a rebound in gross leasing activity, and the four-quarter rolling total leasing is more than 360 msf for the second consecutive quarter. Although there has been improvement in gross leasing, it remains lower than the three-year lead up to the pandemic, wherein the four-quarter rolling leasing averaged 395 msf in 2017-2019.
With a portfolio of modern, class A office buildings in Boston, Los Angeles, New York, Seattle, San Francisco and Washington, DC, Boston Properties is expected to have benefited from the improving office real-estate market during the second quarter. The preference for its premium buildings by office tenants is likely to have aided its second-quarter results.
Further, the drug research and innovation business has continued to experience solid growth due to the need for effective diagnostics, therapies and vaccines. This has increased demand for BXP’s life-science assets, which are anticipated to have witnessed solid growth during the quarter to be reported.
Boston Properties is focused on expansions. In May, it acquired Madison Centre, a 37-story, Class A office property in Seattle’s Downtown area for a gross purchase price of roughly $730 million. With a wide array of client-focused amenities and superior accessibility to public and private transit options, BXP’s latest acquisition seems to be a suitable choice for tenants.
The Zacks Consensus Estimate for second-quarter revenues is pegged at $720.2 million, suggesting growth of 5.3% from the prior-year quarter’s reading. In addition, the consensus estimate for quarterly parking and other revenues is pegged at $24.02 million, implying a 31.4% increase from the year-ago period’s reported number.
Moreover, prior to the second-quarter earnings release, analysts seem optimistic about BXP’s prospects. The Zacks Consensus Estimate for the quarterly FFO per share has been revised 1.1% upward to $1.85 over the past two months, suggesting an increase of 7.6% from the prior-year period’s reported figure.
Earnings Whispers
Our proven model does not conclusively predict an FFO beat for Boston Properties this time. The right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — increases the odds of an FFO beat. However, that is not the case here.
Earnings ESP: Boston Properties has an Earnings ESP of -0.54%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Boston Properties currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Stocks That Warrant a Look
Here are some stocks that are worth considering from the REIT sector as our model shows that these have the right combination of elements to deliver a surprise this reporting cycle:
SBA Communications (SBAC - Free Report) is slated to release second-quarter earnings on Aug 1. SBAC has an Earnings ESP of +1.40% and a Zacks Rank of 3 at present.
Essex Property Trust (ESS - Free Report) is scheduled to report quarterly figures on Jul 26. ESS has an Earnings ESP of +1.21% and a Zacks Rank of 2 currently.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.