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Boston Properties (BXP) Up 0.6% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Boston Properties (BXP - Free Report) . Shares have added about 0.6% in that time frame, underperforming the S&P 500.

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

Boston Properties Q2 FFO Beats Estimates, View Up

Boston Properties’ second-quarter 2018 FFO per share of $1.58 surpassed the Zacks Consensus Estimate of $1.56. The figure also came in higher than the company’s projection of $1.53-$1.55 per share.

This reflects better numbers, than what was projected, from portfolio operations, as well as for development and management service revenues. Also, the company incurred lower-than- projected interest expense in the quarter. However, the tally compares unfavorably with the prior-year quarter FFO per share of $1.67.

Adjusted revenues, comprising base rent and recoveries from tenants during the quarter, inched up 0.3% year over year to $611.7 million. However, the figure missed the Zacks Consensus Estimate of $614.4 million. The year-over-year uptick is attributable to increase in recoveries from tenants.

Boston Properties has also raised its outlook for full-year 2018.

Property Update

As of Jun 30, 2018, Boston Properties’ portfolio comprised 178 properties, covering a total of around 50.2 million square feet of space. This included 12 under construction/redevelopment properties, covering an area of 6 million square feet.

The overall operating portfolio, including 162 properties (excluding three residential properties and hotel), was 90.4% leased as of Jun 30, 2018.

During the June-end quarter, Boston Properties accomplished the sale of its 91 Hartwell Avenue — an around 119,000 net rentable square foot Class An office property — in Lexington, MA, for a gross sale price of around $22.2 million. This resulted in a gain on sale of real estate aggregating about $15.5 million.

This June, the company also completed and fully placed in-service its Signature at Reston development project in Reston, VA. The project includes 508 apartment units and retail space, totaling around 518,000 square feet. The retail space is approximately 81% leased, while residential units are 35% leased.

Liquidity

Boston Properties exited the second quarter with cash and cash equivalents of around $ 472.6 million, up from $434.8 million as of Dec 31, 2017.

Outlook

Boston Properties raised its full-year 2018 FFO per share guidance to $6.36-$6.41, denoting 7 cents per share increase from the mid-point of its prior outlook.

The company projects its third-quarter 2018 FFO per share of $1.61-$1.63.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

Currently, Boston Properties has a subpar Growth Score of D, though it is lagging a bit 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 F. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate investors will probably be better served looking elsewhere.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, Boston Properties has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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