Boston Properties Inc.
), a leading real estate investment trust (REIT), reported fiscal
2012 first quarter funds from operations (FFO) of $1.12 per share,
which marginally missed the Zacks Consensus Estimate by a penny.
Funds from operations, a widely used metric to gauge the
performance of REITs, are obtained after adding depreciation and
amortization and other non-cash expenses to net income.
We cover below the results of the recent earnings announcement,
as well as the subsequent analyst estimate revisions and the Zacks
ratings for the short-term and long-term outlook for the stock.
Earnings Report Review
Boston Properties reported first quarter 2012 FFO of $166.9
million or $1.12 per share, compared with $160.0 million or $1.12
per share in the year-earlier quarter. Total revenues during the
quarter were $447.7 million, compared with $417.2 million in the
The quarterly revenues were well above the Zacks Consensus
Estimate of $428 million. The overall portfolio was 92.1% leased at
(Read our full coverage on this earnings report:
Boston Properties Misses by a Whisker
Earnings Estimate Revisions - Overview
Fiscal earnings estimates have moved up for Boston Properties
since the earnings release, meaning that analysts are bullish about
the long-term performance of the company.
Agreement of Estimate Revisions
In the last 7 days, fiscal 2012 earnings estimates were raised
by 4 analysts out of 11 covering the stock, while none have lowered
their estimates. For fiscal 2012, 4 out of 17 analysts covering the
stock have revised their estimates upward during the same time
period, while none have lowered it. This indicates that the fiscal
earnings estimates are skewed in the positive direction.
Magnitude of Estimate Revisions
Earnings estimates for fiscal 2012 have surged by 5 cents in the
last 7 days to $4.84. For full year 2012, Boston Properties expects
FFO in the range of $4.83-$4.93.
For fiscal 2013, earnings estimates have increased by 2 cents to
$5.20, which signifies that the market fundamentals of the
geographic areas that are being specifically focused by the company
are gradually improving. Management further remained upbeat, albeit
moderately, given the current volatility in the macroeconomic
environment, to record relatively strong results in the coming
The long-term earnings estimate picture for Boston Properties is
neutral. Boston Properties concentrates on a few select high-rent,
high barrier-to-entry geographic markets which usually fare better
in a faltering economy. Two of the largest markets of the company,
New York and Washington DC are still among the best of the office
markets in the U.S.
Furthermore, about 77.6% of the net operating income of the
company was generated from the Central Business Districts during
first quarter 2012, which is anticipated to drive above-average
organic growth over time.
However, Boston Properties has a large development pipeline
which increases operational risks in the current credit-constrained
market, exposing it to rising construction costs, entitlement
delays, and lease-up risk.
Currently, we maintain our long-term Neutral rating on Boston
Properties, which presently has a Zacks #2 Rank that translates
into a short-term Buy recommendation. We also have a Neutral
recommendation and a Zacks #3 Rank (short-term Hold rating) for
Vornado Realty Trust
), a competitor of Boston Properties.
About Earnings Estimate Scorecard
As a PhD from MIT, Len Zacks proved over 30 years ago that
earnings estimate revisions are the most powerful force impacting
stock prices. He turned this ground breaking discovery into two
of the most celebrating stock rating systems in use today. The
Zacks Rank for stock trading in a 1 to 3 month time horizon and
the Zacks Recommendation for long-term investing (6+ months).
These "Earnings Estimate Scorecard" articles help analyze the
important aspects of estimate revisions for each stock after
their quarterly earnings announcements. Learn more about earnings
estimates and our proven stock ratings at
BOSTON PPTYS (BXP): Free Stock Analysis Report
VORNADO RLTY TR (VNO): Free Stock Analysis
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