Why Boston Properties Is Now A Top Pick At RBC

RBC Capital Markets upgraded Boston-based REIT, Boston Properties, Inc BXP, from an Outperform rating to a coveted Top Pick of 2017.

“The company owns high quality assets in top tier office markets in the US, and we expect the portfolio should benefit from a stronger US economy in 2017,” RBC said Tuesday.

While Boston Properties faced some headwinds in 2016, largely due to concerns surrounding the New York City office market, RBC is expecting the NYC market to improve in 2017 alongside a stabilizing financial sector.

The KBW Nasdaq Bank Index is up nearly 22 percent since the election, meaning a stronger financial sector in 2017 could quickly become a tailwind for the NYC office market and the company.

While RBC expects organic growth to remain largely in check in 2017, 2018 could be a different story for the company.

“We expect organic growth will accelerate in 2018 as the company recently signed several large leases that will likely not fully commence until YE17. Overall we believe the market will look past the near-term softness in earnings growth and focus on the upcoming catalysts,” concluded RBC.

RBC maintains a $150 price target on Boston Properties. At last check, shares were trading at $126.