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Is a Beat in Store for Boston Properties (BXP) in Q1 Earnings?
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Boston Properties, Inc. (BXP - Free Report) is slated to report first-quarter 2023 results on Apr 25, after market close. While its quarterly results are likely to reflect year-over-year growth in revenues, funds from operations (FFO) per share might exhibit a decline.
In the last reported quarter, this office real-estate investment trust (REIT) delivered a surprise of 1.09% in terms of FFO per share. BXP’s performance during the quarter reflected healthy leasing activity, which aided top-line growth.
Over the preceding four quarters, Boston Properties’ FFO per share surpassed the Zacks Consensus Estimate on each occasion, the average beat being 3.17%. This is depicted in the graph below:
Per a Cushman & Wakefield (CWK - Free Report) report, the U.S. office market demand continues to suffer as office-using employment growth has simmered down amid inflationary pressures, increased interest rates, tight labor markets and economic uncertainty. Net absorption in first-quarter 2023 was negative 32.2 million square feet (msf), marking the lowest quarter in two years.
The overall gross leasing activity for the four quarters ending first-quarter 2023 was 309 msf. Although the figure was 69 msf above the pandemic-era low in first-quarter 2021, it has fallen for three quarters straight. Further, leasing activity in first-quarter 2023 was slightly below the 20-year historical average of 320 msf.
With dampened absorption and increased sublease availabilities, vacancies are on the rise across the United States office market. The national vacancy rate climbed 60 basis points to 18.6% in the first quarter, reflecting the largest quarter-over-quarter increase since second-quarter 2021. The national asking rent came in at $37.03 for the quarter.
Nonetheless, per the Cushman & Wakefield report, the flight-to-quality trends have continued, with 25 U.S. markets reporting positive demand among Class A office buildings.
We believe that Boston Properties’ portfolio of modern, class A office buildings are likely to have benefited from this preference for premium office spaces by office tenants, making us optimistic about its first-quarter results.
Its long-term lease agreements with a diverse tenant base across industries having a solid credit profile are expected to have aided its cashflows during the to-be-reported quarter.
Also, amid the growing need for drug research and innovation, BXP’s life-science assets are anticipated to have witnessed solid demand during the quarter, aiding leasing activity.
Further, the company’s efforts to convert numerous straight office buildings to laboratory/life science spaces in its suburban portfolio on this growing demand are expected to have paid off well.
The Zacks Consensus Estimate for first-quarter revenues is pegged at $750.8 million, suggesting growth of 4.6% from the prior-year quarter’s tally. Also, the consensus estimate for quarterly parking and other revenues is pegged at $25.2 million, implying an almost 16% increase from the year-ago period’s reported number.
Boston Properties’ is likely to have maintained its robust balance sheet position during the to-be-reported quarter, which is expected to have supported its development and redevelopment activities.
However, higher interest expenses are expected to have cast a pall on the company’s quarterly performance.
The Zacks Consensus Estimate for the quarterly FFO per share has been unchanged at $1.70 over the past two months. Moreover, the same suggests a fall of 6.6% from the prior-year period’s reported number.
Earnings Whispers
Our proven model predicts 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 a beat. This is the case here.
Earnings ESP: Boston Properties has an Earnings ESP of +7.13%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are some other stocks that are worth considering from the REIT sector, as our model shows that these too have the right combination of elements to deliver a surprise this reporting cycle:
VICI Properties (VICI - Free Report) is slated to report quarterly numbers on May 1. VICI has an Earnings ESP of +3.34% and carries a Zacks Rank #2 (Buy) presently.
Equinix (EQIX - Free Report) is scheduled to report first-quarter earnings on May 3. EQIX has an Earnings ESP of +0.94% and a Zacks Rank #2 currently.
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Is a Beat in Store for Boston Properties (BXP) in Q1 Earnings?
Boston Properties, Inc. (BXP - Free Report) is slated to report first-quarter 2023 results on Apr 25, after market close. While its quarterly results are likely to reflect year-over-year growth in revenues, funds from operations (FFO) per share might exhibit a decline.
In the last reported quarter, this office real-estate investment trust (REIT) delivered a surprise of 1.09% in terms of FFO per share. BXP’s performance during the quarter reflected healthy leasing activity, which aided top-line growth.
Over the preceding four quarters, Boston Properties’ FFO per share surpassed the Zacks Consensus Estimate on each occasion, the average beat being 3.17%. 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, the U.S. office market demand continues to suffer as office-using employment growth has simmered down amid inflationary pressures, increased interest rates, tight labor markets and economic uncertainty. Net absorption in first-quarter 2023 was negative 32.2 million square feet (msf), marking the lowest quarter in two years.
The overall gross leasing activity for the four quarters ending first-quarter 2023 was 309 msf. Although the figure was 69 msf above the pandemic-era low in first-quarter 2021, it has fallen for three quarters straight. Further, leasing activity in first-quarter 2023 was slightly below the 20-year historical average of 320 msf.
With dampened absorption and increased sublease availabilities, vacancies are on the rise across the United States office market. The national vacancy rate climbed 60 basis points to 18.6% in the first quarter, reflecting the largest quarter-over-quarter increase since second-quarter 2021. The national asking rent came in at $37.03 for the quarter.
Nonetheless, per the Cushman & Wakefield report, the flight-to-quality trends have continued, with 25 U.S. markets reporting positive demand among Class A office buildings.
We believe that Boston Properties’ portfolio of modern, class A office buildings are likely to have benefited from this preference for premium office spaces by office tenants, making us optimistic about its first-quarter results.
Its long-term lease agreements with a diverse tenant base across industries having a solid credit profile are expected to have aided its cashflows during the to-be-reported quarter.
Also, amid the growing need for drug research and innovation, BXP’s life-science assets are anticipated to have witnessed solid demand during the quarter, aiding leasing activity.
Further, the company’s efforts to convert numerous straight office buildings to laboratory/life science spaces in its suburban portfolio on this growing demand are expected to have paid off well.
The Zacks Consensus Estimate for first-quarter revenues is pegged at $750.8 million, suggesting growth of 4.6% from the prior-year quarter’s tally. Also, the consensus estimate for quarterly parking and other revenues is pegged at $25.2 million, implying an almost 16% increase from the year-ago period’s reported number.
Boston Properties’ is likely to have maintained its robust balance sheet position during the to-be-reported quarter, which is expected to have supported its development and redevelopment activities.
However, higher interest expenses are expected to have cast a pall on the company’s quarterly performance.
The Zacks Consensus Estimate for the quarterly FFO per share has been unchanged at $1.70 over the past two months. Moreover, the same suggests a fall of 6.6% from the prior-year period’s reported number.
Earnings Whispers
Our proven model predicts 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 a beat. This is the case here.
Earnings ESP: Boston Properties has an Earnings ESP of +7.13%. 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 Rank (Strong Buy) stocks here.
Other Stocks That Warrant a Look
Here are some other stocks that are worth considering from the REIT sector, as our model shows that these too have the right combination of elements to deliver a surprise this reporting cycle:
VICI Properties (VICI - Free Report) is slated to report quarterly numbers on May 1. VICI has an Earnings ESP of +3.34% and carries a Zacks Rank #2 (Buy) presently.
Equinix (EQIX - Free Report) is scheduled to report first-quarter earnings on May 3. EQIX has an Earnings ESP of +0.94% and a Zacks Rank #2 currently.
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.