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On Monday, Jefferies began coverage on shares of Boston Properties Inc. (NYSE:BXP) with a Buy rating and a price target set at $78.00. Jefferies analysts see potential for significant occupancy gains for the real estate investment trust, citing a stable lease expiration profile through 2027. With a market capitalization of $11.58 billion and a notable track record of 28 consecutive years of dividend payments, Boston Properties stands as a prominent player in the Office REITs industry. According to InvestingPro analysis, the stock appears undervalued at current levels, presenting a potential opportunity for investors.
Boston Properties, which boasts a low percentage of lease expirations of 17.8% of annual base rent (ABR) through 2027, is poised for material occupancy improvements. Jefferies projects a cumulative increase of 300 basis points in occupancy for the years 2026 and 2027, following a flat performance expected for the current year. The company currently offers an attractive dividend yield of 5.98%, supported by steady revenue growth of 4.45% over the last twelve months.
The firm also notes that while they have not factored additional acquisitions into their estimates, Boston Properties could benefit from such activities due to its advantageous cost of capital, currently at 7.7%. Analysts believe that the company’s cost of capital positions it well to act on potential acquisition opportunities, which could serve as a catalyst for the stock.
Looking forward, Jefferies anticipates a return to strong growth for Boston Properties in 2026, with forecasted funds from operations (FFO) increasing by 4.8%. The analysts expect that the realization of occupancy gains will contribute to an improvement in market sentiment towards the company as its growth narrative progresses. For deeper insights into Boston Properties’ growth potential and financial health metrics, InvestingPro subscribers can access comprehensive analysis and additional ProTips in the detailed Pro Research Report, available exclusively on the platform.
The coverage initiation by Jefferies reflects a positive outlook on Boston Properties’ ability to leverage its stable lease expiration schedule and cost of capital for growth in the coming years. The company’s shares are anticipated to benefit as it demonstrates occupancy improvements and potentially capitalizes on acquisition opportunities.
In other recent news, Boston Properties (BXP) reported its fourth-quarter earnings for 2024, with results showing a significant shortfall in earnings per share (EPS), which came in at -$1.45 against the expected $0.48. Despite this, the company’s revenue exceeded expectations, reaching $858.6 million compared to the projected $836.85 million. Additionally, Boston Properties experienced a 4% increase in annual revenue, reflecting strong top-line performance. In a strategic move, BXP announced a joint venture to develop a residential project in Jersey City, New Jersey, alongside CrossHarbor Capital and the Albanese Organization, with BXP holding a 19% common equity interest and contributing $65 million in preferred equity.
Meanwhile, KeyBanc analyst Upal Rana maintained a Sector Weight rating on Boston Properties, noting expectations of declining occupancy rates through the first half of 2025, with potential stabilization and improvement in the latter half of the year. Rana highlighted the company’s development pipeline expansion but cautioned about potential underperformance if leasing activity does not keep pace. Despite the earnings miss, Boston Properties demonstrated robust leasing activity, with 5.6 million square feet leased in 2024, marking a 35% increase from the previous year.
Looking ahead, Boston Properties provided guidance for 2025, projecting funds from operations (FFO) between $6.77 and $6.95 per share. The company anticipates modest increases in leased square footage and meaningful growth potential in 2026-2027, supported by a development pipeline of approximately 2.3 million square feet. These developments underscore Boston Properties’ strategic focus on expanding its portfolio and leveraging opportunities in key markets.
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