What's in the Cards for Healthpeak Properties This Earnings Season?

In the preceding four quarters, Healthpeak’s FFOA per share, surpassed the Zacks Consensus Estimate on three occasions and met in the remaining period, with the average beat being 2.83%. The graph below depicts this surprising history:

Factors at Play for Healthpeak

Long-term growth in biopharma research and drug development supports the demand outlook for specialized lab real estate. Healthpeak’s focus on the lab segment is strategically aligned with this tailwind and may have aided its performance in the to-be-reported quarter.

Moreover, the senior citizen population is on the rise, and the healthcare expenditure for this age cohort is generallly higher than that of the overall population. Healthpeak’s life plan communities, formerly known as continuing care retirement communities, are anticipated to have benefited from this positive expenditure trend, supporting the segment’s quarterly performance.

However, high interest expenses during the second quarter are likely to have been a spoilsport for Healthpeak. The company’s operators contend with peers for occupancy. This would have likely hurt Healthpeak’s power to raise rents and affect revenues and profitability.

DOC’s Projections for Q2

The Zacks Consensus Estimate for second-quarter total revenues is pegged at $726.16 million, indicating a rise of 4.6% from the year-ago reported number.

Before the second-quarter earnings release, the company’s activities were inadequate to gain analysts’ confidence. The Zacks Consensus Estimate for the quarterly FFOA per share has remained unchanged at 44 cents over the past three months. The figure suggests a 4.4% fall from the year-ago quarter’s tally.

What Our Quantitative Model Predicts for Healthpeak

Our proven model does not conclusively predict a surprise in terms of FFOA per share for DOC this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFOA beat, which is not the case here.

Healthpeak currently has an Earnings ESP of 0.00% and a Zacks Rank of #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks That Warrant a Look

Here are two stocks from the broader REIT industry — Host Hotels & Resorts HST and Lamar Advertising LAMR — that you may want to consider, as our model shows that these have the right combination of elements to report a surprise this quarter.

Host Hotels is slated to report quarterly numbers on Aug. 5. HST has an Earnings ESP of +1.73% and carries a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

LAMR is scheduled to report quarterly numbers on Aug. 6. The company has an Earnings ESP of +0.22% and a Zacks Rank of 3.

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

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This article originally published on Zacks Investment Research (zacks.com).

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