Piper Sandler Upgrades Hudson Pacific PT to $7, Maintains Overweight

Piper Sandler Upgrades Hudson Pacific PT to $7, Maintains Overweight

In a recent move, Piper Sandler upgraded its outlook on Hudson Pacific Properties (NYSE: HPP) from Neutral to Overweight [1]. The firm's analysts now have a price target of $7 for the real estate investment trust (REIT), representing a potential upside of 11.4% from its current trading price [1].

Hudson Pacific Properties is projected to generate an annual revenue of $1,075 million in 2023, marking a 4.87% increase compared to the previous year [1]. Despite this revenue growth, the company is expected to report a non-GAAP EPS of -0.04 for the year [1]. However, Hudson Pacific Properties continues to pay dividends to its shareholders, with a recent payout of $0.12 per share ($0.50 annualized) [1].

The REIT's dividend yield currently stands at 7.12%, significantly higher than the historical average of 5.69% [1]. While this may appear attractive, the company's dividend payout ratio is -1.11, suggesting that it is dipping into savings to maintain its dividend payments [1]. This is a concerning sign, particularly for a company with a negative dividend growth rate of -0.50% over the past three years [1].

Institutional sentiment towards Hudson Pacific Properties has also shifted in recent quarters. According to Fintel, there are now 505 funds or institutions holding positions in the REIT, down from 530 in the previous quarter [1]. The average portfolio weight dedicated to HPP has also decreased, from 0.11% to 0.07%, while total institutional ownership has increased by 4.53% [1].

The put/call ratio for Hudson Pacific Properties, which measures the ratio of put options (bearish bets) to call options (bullish bets), currently stands at 0.94, indicating a slightly bearish sentiment [1]. However, this should be taken in context with Piper Sandler's bullish outlook and the potential upside from the REIT's current trading price.

In summary, while Hudson Pacific Properties faces some challenges in terms of its negative dividend growth and high dividend payout ratio, Piper Sandler's upgrade to Overweight and bullish price target suggest that there may be potential upside for the REIT. Institutional sentiment remains bearish, but this may present an opportunity for investors looking to capitalize on any potential market volatility.

References:

[1] Fintel. (2023, September 5). Piper Sandler Upgrades Hudson Pacific Properties (HPPH) to Overweight, Sets Price Target at $7. Retrieved September 7, 2023, from https://www.nasdaq.com/articles/piper-sandler-upgrades-hudson-pacific-properties-hpp