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Healthpeak (PEAK) Down 2.6% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Healthpeak (PEAK - Free Report) . Shares have lost about 2.6% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Healthpeak due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Healthpeak’s Q2 FFO & Revenues Beat, Same-Store NOI Up

Healthpeak reported second-quarter 2022 FFO as adjusted per share of 44 cents, surpassing the Zacks Consensus Estimate by a whisker. The reported figure was up 10% from the year-ago quarter’s 40 cents.

The healthcare REIT generated revenues of $517.9 million, outpacing the Zacks Consensus Estimate of $505.8 million. The figure was 8.8% higher than the prior-year quarter’s $476.2 million.

The performance was backed by solid top-line growth. However, weakness in the CCRC portfolio was witnessed during the quarter.

Behind the Headlines

In the June-ended quarter, Healthpeak reported 3.7% year-over-year growth in the same-store portfolio cash adjusted NOI.

It witnessed 4.3% and 4.5% year-over-year growth in the same-store portfolio cash (adjusted) NOI for its life-science and medical office segments, respectively. However, the same-store portfolio cash adjusted NOI for the CCRC portfolio declined 2.1% from the prior-year quarter.

Portfolio Activity

In May 2022, Healthpeak acquired an on-campus MOB encompassing 68,000 square feet for $26 million. The property is directly attached to Northwest Medical Center, a 128-bed full-service hospital in Bentonville, AR. Further, the MOB is 98% leased with a weighted average remaining lease term of roughly 4.5 years.

During the reported quarter, it placed in service the remaining 74,000 square feet at The Boardwalk, located in the Torrey Pines submarket of San Diego. This represented an investment of $48 million.  

Moreover, the company placed in service 160,000 square feet at Phase II of The Shore at Sierra Point, located in Brisbane, CA. This represented an investment of $184 million. The remaining 36,000 square feet in Phase II, which is yet to be placed in service, is expected to have initial occupancy in the fourth quarter of 2022. It is 100% leased and has a total expected development cost of $47 million.

During the quarter, PEAK also disposed of three non-core MOB assets, which generated proceeds of $26 million.

Balance Sheet

Healthpeak exited second-quarter 2022 with cash and cash equivalents of $73.01 million, down from $89.06 million as of Mar 31, 2022.

As of Jun 30, 2022, it had $2 billion of liquidity, which included the net proceeds from the future settlement of shares sold under equity forward contracts during the third quarter of 2021. Its net debt to adjusted EBITDAre was 5.1X as of the same date.

2022 Outlook

Healthpeak reaffirmed its FFO guidance for 2022.

It expects FFO as adjusted per share to lie between $1.68 and $1.74.

The same-store portfolio cash-adjusted NOI growth for the total portfolio was revised upward from 3.25-4.75% to 3.5-5.0%. The same for the MOB portfolio was raised to 2.5-3.5% from 1.75-2.75%.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

VGM Scores

Currently, Healthpeak has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, Healthpeak has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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