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What's in Store for Healthpeak (PEAK) This Earnings Season?

Healthpeak Properties, Inc. PEAK is slated to report fourth-quarter and full-year 2022 results on Feb 7, after market close. The quarterly results are expected to reflect year-over-year growth in quarterly revenues and funds from operations (FFO) per share.

In the last reported quarter, this healthcare real estate investment trust (REIT) reported FFO per share of 43 cents, in line with the Zacks Consensus Estimate. The performance was backed by healthy top-line growth. Moreover, improvement in same-store portfolio cash (adjusted) net operating income (NOI) was witnessed across the portfolio.

In the preceding four quarters, Healthpeak’s earnings beat the Zacks Consensus Estimate on two occasions and met the same on the other two, the average being 1.18%. The graph below depicts this surprise history:

Healthpeak Properties, Inc. Price and EPS Surprise

Healthpeak Properties, Inc. price-eps-surprise | Healthpeak Properties, Inc. Quote

Factors at Play

Healthpeak has a high-quality and well-balanced portfolio across three core asset classes of life science, medical office and continuing care retirement communities (CCRC) real estate.

The life-science industry has been benefiting from the increasing life expectancy of the United States population and biopharma drug development growth opportunities. Amid this, the demand for life science real-estate assets has been soaring. Consequently, PEAK’s life-science portfolio is likely to have experienced healthy leasing activity and rent growth during the quarter.

Also, a well-diversified tenant base in the life-science portfolio is expected to have led to steady rental revenue generation during the fourth quarter.

Senior citizens constitute a major customer base of healthcare services and incur higher healthcare expenditures than the average population.

Healthpeak’s CCRC portfolio, which refers to its retirement communities that include independent living, assisted living and skilled nursing units, is likely to have benefited from this expenditure trend.

The company’s top line is expected to have improved amid these tailwinds. The Zacks Consensus Estimate for fourth-quarter total revenues is pegged at $519.96 million, indicating a year-over-year rise of 7.6%.

Healthpeak’s robust balance-sheet strength is expected to have aided the company’s asset base expansion through acquisitions, developments and redevelopments during the to-be-reported quarter.

However, increasing interest expenses might have been a deterrent for the company during the quarter.

Healthpeak’s activities during the fourth quarter were not adequate to gain analysts’ confidence. The Zacks Consensus Estimate for the FFO per share has been unchanged at 43 cents over the past month. Nonetheless, on a year-over-year basis, it suggests growth of 4.9%.

For 2022, Healthpeak projected FFO per share in the range of $1.72 to $1.74.

For the full year, the Zacks Consensus Estimate for FFO per share has moved a penny upward to $1.74 over the past two months. This indicates an 8.1% increase from the year-earlier reported figure on revenues of $2.05 billion.

What Our Quantitative Model Predicts

Our proven model does not conclusively predict a surprise in terms of FFO per share for PEAK this season. The combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — increases the odds of a beat. However, that’s not the case here.

Earnings ESP: Healthpeak has an Earnings ESP of +1.54%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: It currently carries a Zacks Rank #4 (Sell).

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:

Ventas VTR is scheduled to report quarterly figures on Feb 9. VTR has an Earnings ESP of +0.17% and a Zacks Rank #3 currently.

Public Storage PSA is slated to report quarterly numbers on Feb 21. PSA has an Earnings ESP of +0.22% and carries a Zacks Rank of 3.

Extra Space Storage EXR is scheduled to report quarterly figures on Feb 22. EXR has an Earnings ESP of +0.42% and a Zacks Rank of 3 presently.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.

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