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HCP (HCP) Up 2.4% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for HCP (HCP - Free Report) . Shares have added about 2.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is HCP due for a pullback? 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 catalysts.

HCP Tops Q3 FFO Estimates on NOI Growth, Misses on Revenues

HCP reported third-quarter 2018 FFO as adjusted of 44 cents per share, beating the Zacks Consensus Estimate of 43 cents. Comparable FFO as adjusted in the prior-year quarter was 48 cents per share.

Results were supported by decent performance of the company’s life-science and medical-office segment.

This healthcare REIT generated revenues of $456 million, narrowly missing the Zacks Consensus Estimate of $457.45 million. Nonetheless, the figure compares favorably with the year-ago number of $454 million.

Behind the Headlines

HCP witnessed 1.7% year-over-year rise in the three-month cash SPP net operating income (NOI). Though there was growth of 2.6% in life-science cash NOI, 1.6% increase in senior-housing triple-net segment, 2.3% rise in the medical office segment and 6.5% advancement in other non-reportable segments, the positives were partly offset by a 6.3% decrease in SHOP cash NOI.

During the quarter under review, HCP completed the sale of 11 senior housing communities, totaling $76 million to third-party buyers.

Year to date, management of 35 senior-housing communities, owned by HCP, have been transitioned from Brookdale to other operators. The remaining four will likely be transitioned in 2018.

HCP had cash and cash equivalents of around $78.9 million as of Sep 30, 2018, significantly up from $55.3 million recorded at the end of 2017. Additionally, the company ended the third quarter with $1.4 billion of liquidity from a combination of cash and availability under its $2-billion credit facility.

Outlook

HCP reaffirmed its 2018 FFO as adjusted guidance at $1.79-$1.83 per share.

Furthermore, the company reaffirmed the 2018 SPP cash NOI growth guidance of 0.25-1.75%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

At this time, HCP has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, 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.

Outlook

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




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