The Bull And Bear Cases For Hudson Pacific Properties

Hudson Pacific Properties Inc HPP reported in-line earnings results Nov. 2 and the stock has rallied around 5 percent since the event.

The Analyst

Goldman Sachs' Andrew Rosivach downgraded Hudson Pacific Properties from Buy to Hold and reduced the price target from $39 to $36.50.

The Thesis

The stock is fairly valued given the slowdown in West Coast office employment growth and significant near-term leasing risk, Rosivach said in a Monday note. (See Rosivach's track record here.) 

Goldman Sachs' 2018 FFO per-share expectations are 4 percent below consensus, mainly due to the end of the Cisco Systems, Inc. CSCO lease at Campus Center in Milpitas, California, the analyst said. 

In the bull case scenario, Rosivach said he sees a possibility for stronger-than-expected releasing activity with higher spreads and/or higher releasing volumes. On the other hand, a bear case scenario is likely in the event of more significant macro deterioration leading to lower-than-expected occupancy and releasing spreads, the analyst said. 

The Price Action

The stock opened the trading session 2.82 percent lower Monday, but spiked immediately and it is currently trading 0.1 percent higher.

Related Links:

Analyst Loves Acadia Realty's Strategy, But Not Its Valuation

3 REITs To Get Bullish On In 2018