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What's in Store for Boston Properties (BXP) This Earnings Season?

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Boston Properties, Inc. BXP is slated to report third-quarter 2021 results on Oct 26, after market close. The company’s quarterly results will likely highlight year-over-year growth in both funds from operations (FFO) per share and revenues.

In the last reported quarter, this office real estate investment trust (REIT) delivered a surprise of 6.83% in terms of FFO per share. The higher-than-expected results reflected an improved portfolio performance, and better-than-projected parking, hotel, retail and termination income.

Over the preceding four quarters, Boston Properties surpassed the FFO per share estimate on two occasions and missed in the other two, the average negative surprise being 2.8%. This is depicted in the graph below:

Boston Properties, Inc. Price and EPS Surprise

Boston Properties, Inc. Price and EPS Surprise
Boston Properties, Inc. Price and EPS Surprise

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

Let’s see how things have shaped up for this announcement.

Factors at Play

With relaxations of the pandemic-related restrictions and accelerated vaccine roll-outs, there has been return of the workforce to offices and other places of businesses. Amid these, Boston Properties’ portfolio of modern, class A office buildings is likely to have gained from the flight-to-quality preference of office tenants. These make us optimistic about the company’s third-quarter results.

Moreover, amid the heightening need for effective diagnostics, therapies and vaccines to fight the health crisis, the drug research and innovation business continued to witness solid growth during third-quarter 2021, in turn, driving the demand for its life-science assets.

The REIT has seen an uptick in leasing activity during the third quarter. In September, the company signed a 10-year lease renewal and expansion agreement with Wellington Management at Atlantic Wharf.

Apart from these, the company completed the acquisition of Safeco Plaza in an attempt to enter the Seattle market during the quarter.

The Zacks Consensus Estimate for the third-quarter revenues is pegged at $687.6 million, suggesting year-over-year growth of 3.2%. In addition, the consensus estimate for quarterly parking and other revenues is pegged at $19.10 million, calling for a 17% increase from the year-ago period.

Prior to the third-quarter earnings release, analysts seem to be optimistic about the company’s prospects as the Zacks Consensus Estimate for the quarterly FFO per share has been revised marginally upward to $1.69 over the past month. Further, it calls for a 7.6% increase from the prior-year period.

The company projects the third-quarter 2021 FFO per share at $1.68-$1.70.

However, the pandemic’s impact on the labor markets continued to overwhelm the U.S. office real estate market during the quarter to be reported, resulting in a negative net absorption and an increase in vacancy levels. The remote-working wave is still continuing and though the office-using employment is recovering, it is still below the pre-pandemic level.

Specifically, going by a Cushman & Wakefield CWK report, the U.S. office sector witnessed a negative net absorption of 18.3 million square feet for the sixth consecutive quarter. Also, the vacancy rate increased to 17.4% during the September-end quarter from the prior year’s 14.3%. Amid these, the rate of rental growth might have been tempered to some extent.

Earnings Whispers

We cannot conclusively predict that Boston Properties will be able to beat the Zacks Consensus Estimate this time. This is because the company doesn't have the right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Boston Properties has an Earnings ESP of 0.00%.

Zacks Rank: It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks That Warrant a Look

Here are some stocks from the REIT sector that you may want to consider, as our model shows that these have the right combination of elements to report a surprise this quarter:

Apple Hospitality REIT APLE, slated to release third-quarter earnings on Nov 4, has an Earnings ESP of +26.67% and sports a Zacks Rank of 1, at present.

Life Storage, Inc. LSI, scheduled to report quarterly figures on Nov 2, has an Earnings ESP of +0.62% and currently flaunts a Zacks Rank of 1.

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


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Boston Properties, Inc. (BXP) : Free Stock Analysis Report

Life Storage, Inc. (LSI) : Free Stock Analysis Report

Apple Hospitality REIT, Inc. (APLE) : Free Stock Analysis Report

Cushman & Wakefield PLC (CWK) : Free Stock Analysis Report

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