Healthpeak (PEAK) to show third quarter results: what’s in the charts? – October 28, 2022

Healthpeak Properties, Inc. (PEAK Free Report) is expected to release its third quarter results on November 1, after the market closes. Results are expected to reflect year-over-year growth in quarterly revenue and funds from operations (FFO) per share.

During the last reported quarter, this healthcare real estate investment fund (REIT) recorded a surprise of 2.33% in terms of adjusted FFO per share. Performance was supported by solid top line growth. However, weakness in the Continuing Care Retirement Communities (CCRC) portfolio was observed during the quarter.

Over the previous four quarters, Healthpeak’s adjusted FFO per share beat the Zacks consensus estimate on all occasions, averaging 1.82%. The graphic below illustrates this surprise story:

Factors at play

Healthpeak’s life sciences real estate portfolio is expected to see strong demand during the quarter, to be noted due to the growing need for drug research and innovation. As a result, this portfolio should have seen good rental activity and rental growth during the quarter.

Seniors constitute a significant clientele of health services and bear higher health costs compared to the average population.

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

It has also seen an improvement in occupancy levels. According to its September investor presentation, the August Census Average Daily Occupancy (ADC) for independent/assisted/memory care climbed 130 basis points from the June ADC.

The factors mentioned above likely contributed to PEAK’s revenue performance in the quarter under review.

Zacks’ consensus estimate for total third-quarter revenue is pegged at $518.4 million, indicating a 7.7% year-over-year increase.

Additionally, Healthpeak’s strong balance sheet is expected to have contributed to the expansion of the company’s asset base through acquisitions, developments and redevelopments in the quarter ahead.

However, rising interest rates should lead to higher spending in the third quarter.

Healthpeak’s activities in the third quarter were not enough to win analysts’ confidence. The Zacks consensus estimate for FFO per share was unchanged at 43 cents over the past month. Nevertheless, on an annual basis, it suggests growth of 7.5%.

What our quantitative model predicts

Our proven model does not conclusively predict a surprise FFO per share for PEAK this season. The combination of a positive ESP Earnings and a Zacks rank #3 (hold) or higher – increases the chance of a beatdown. However, that is not the case here.

ESP Earnings: Healthpeak has an ESP on revenue of -1.67%. You can discover the best stocks to buy or sell before they’re flagged with our Income ESP Filter.

Zack’s Ranking: He currently wears a Zacks Rank #2 (Buy). You can see the full list of today’s Zacks #1 Rank stocks here.

Actions worth a look

Here are a few stocks worth considering in the REIT sector, as our model shows they have the right mix of elements to surprise this reporting cycle:

public storage (Message of public interest Free Report) is expected to release quarterly numbers on Nov. 1. PSA has an ESP on earnings of +1.34% and a Zacks ranking of 3.

Extra space storage (EXR Free Report) is expected to release quarterly numbers on Nov. 1. EXR currently has an Earnings ESP of +1.31% and a Zacks Rank of 3.

Host Hotels and Resorts (HST Free Report) is expected to release quarterly numbers on Nov. 2. HST has an ESP on Revenue of +0.71% and a Zacks Rank of 3 currently.

Stay up to date with upcoming results announcements with the Zacks Earnings Schedule.

Note: Everything related to earnings presented in this description represents funds from operations (FFO) – a metric widely used to assess the performance of REITs.

Carol N. Valencia