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On Monday, Jefferies initiated coverage on Hudson Pacific Properties (NYSE:HPP) with a Hold rating and established a price target of $2.70. The firm’s analysts cited concerns about the company’s future, particularly in the context of the West Coast office market and the studio business operated by Hudson (NYSE:HUD) Pacific. According to InvestingPro data, HPP currently trades at $2.75, near its 52-week low of $2.39, with the stock having declined over 56% in the past year.
The analysts expressed caution, noting that shares of Hudson Pacific Properties are trading near an all-time low. They highlighted the current uncertainty in the market, which impacts the visibility of recovery prospects for the company’s operations. The West Coast Office sector, where Hudson Pacific holds significant interests, is one area where recovery seems unclear. Despite these challenges, InvestingPro analysis shows the company maintains a significant 7.27% dividend yield and strong liquidity with a current ratio of 1.55.
Additionally, the studio business of Hudson Pacific is still experiencing the effects of budget constraints. This part of the company’s portfolio has not been immune to financial pressures, which adds another layer of uncertainty to the firm’s overall outlook.
Jefferies analysts believe that any significant improvement in office occupancy rates for Hudson Pacific Properties may not occur until 2026. This projection suggests a prolonged period before the company sees a turnaround in one of its core areas of business.
The Hold rating reflects Jefferies’ neutral stance on the stock at this time, indicating that the analysts do not see significant upside or downside in the near term based on the information currently available. The price target of $2.70 serves as a reference for investors regarding the firm’s valuation of Hudson Pacific Properties shares in the current market environment.
In other recent news, Hudson Pacific Properties has finalized the sale of a non-core office property in Los Angeles for $46 million. This transaction is part of the company’s broader strategy to divest non-essential assets, which has generated $93.8 million in proceeds since mid-November of last year. In addition, BTIG analyst Thomas Catherwood has adjusted the price target for Hudson Pacific to $10, down from $11, while maintaining a Buy rating. This revision comes as the company prepares to release its fourth-quarter earnings report on February 20, 2025. Catherwood’s analysis highlights a reduction in studio production due to recent wildfires and increased interest expenses, leading to a decrease in the full-year 2025 funds from operations per share estimate.
Furthermore, Hudson Pacific has confirmed that its Los Angeles office and studio facilities are operational and unaffected by a recent unspecified event that impacted the community. The company is also moving forward with the sale of the Foothill Research Center office property, expected to close in the first quarter of 2025. Meanwhile, Hudson Pacific’s Chairman and CEO, Victor Coleman, expressed relief that the company’s assets remain intact and reaffirmed support for community rebuilding efforts. These developments reflect Hudson Pacific’s ongoing efforts to streamline its portfolio and focus on its core markets.
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