On Monday, BofA Securities shifted its stance on Healthpeak Properties Inc (NYSE: NYSE:DOC), upgrading the stock from Underperform to Buy and increasing the price target to $25.00 from the previous $18.00. The adjustment was made following a review of the company's anticipated adjusted funds from operations (AFFO), with new estimates for 2024 at $1.55, a slight increase from the prior $1.54, and for 2025 at $1.70, up from $1.69.
The upgrade reflects BofA Securities' belief that Healthpeak Properties' earnings will hit a low in 2024, with potential for substantial net operating income (NOI) growth due to development and redevelopment leasing activities. The firm also sees possibilities for additional value through asset sales and stock buybacks.
The analyst noted a discrepancy between their growth projections and the market consensus, citing a 7.8% compound annual growth rate (CAGR) for Healthpeak's 2025-2028 AFFO, compared to the Street's 2.9%.
The analyst highlighted the attractive yield offered by Healthpeak Properties, pointing out a 6.6% distribution yield, which stands above the average real estate investment trust (REIT) yield of 4.3%. This yield is seen as a payment to investors while they await a potential re-rating of the stock, which BofA Securities anticipates could result in a 33.3% upside in price.
The upgrade by BofA Securities comes at a time when Healthpeak Properties is poised for a turnaround in earnings, with the firm identifying several levers for growth and shareholder value enhancement. The increased price target and improved rating signal a more optimistic outlook for the company's financial performance and stock valuation in the coming years.
InvestingPro Insights
Recent data from InvestingPro illustrates a nuanced picture for Healthpeak Properties Inc (NYSE: DOC). With a market capitalization of $13.48 billion and a Price/Earnings (P/E) ratio standing at 33.6, the company is perceived as trading at a high earnings multiple. This is further underscored by an adjusted P/E ratio for the last twelve months as of Q4 2023 at 59.42, which suggests a premium valuation compared to historical earnings.
However, the company's financial stability is highlighted by a couple of key metrics. Healthpeak's liquid assets have been reported to exceed its short-term obligations, indicating a strong liquidity position. Additionally, the company has maintained dividend payments for 40 consecutive years, a testament to its consistent shareholder returns, with a notable dividend yield of 6.4% as of early 2024.
For those looking to delve deeper into Healthpeak Properties' financial health and future prospects, InvestingPro offers additional insights. There are 7 more InvestingPro Tips available, which can provide further guidance on the stock's potential. Interested readers can use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking a wealth of expert analysis and real-time data to inform investment decisions.
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