JPMorgan upgrades Boston Properties stock rating on office recovery

Investing.com - JPMorgan upgraded Boston Properties Inc. (NYSE:BXP), a prominent player in the Office REITs industry with a market capitalization of $12.6 billion, from Underweight to Neutral on Monday, raising its price target to $78.00 from $72.00. According to InvestingPro analysis, the company appears undervalued at current levels.

The upgrade comes as JPMorgan’s stance on office real estate became more constructive late in 2024, with signs of occupancy levels troughing and improving leasing activity now materializing for Boston Properties. The company maintains strong financial health with a current ratio of 1.17, indicating sufficient liquidity to meet short-term obligations.

Despite ongoing occupancy declines, JPMorgan expects this trend to reverse in coming quarters as signed leases commence and further leasing activity continues, supported by Boston Properties’ limited lease expiration schedule of 4.2% for 2025, 3.9% for 2026, and 5.1% for 2027.

JPMorgan previously viewed Boston Properties as less attractive than more targeted office investments in specific markets like New York City, the West Coast, or life sciences properties.

The firm now believes Boston Properties’ broader portfolio footprint makes more sense as the office recovery broadens, while life sciences properties are likely to lag, with the company’s market capitalization providing sufficient scale to attract investor capital.

In other recent news, Boston Properties Inc. reported its first-quarter 2025 earnings, revealing an earnings per share (EPS) of $0.39, surpassing the forecast of $0.37. The company’s revenue also exceeded expectations, reaching $865.2 million against a forecast of $835.53 million. Despite these positive results, the company’s stock experienced a decline in after-hours trading, reflecting investor concerns over long-term guidance and market conditions. In terms of analyst ratings, Evercore ISI maintained an Outperform rating on Boston Properties, with a price target of $75.00, while Piper Sandler reaffirmed an Overweight rating with an $85.00 price target. Conversely, Truist Securities adjusted its outlook, reducing the price target to $71.00 and maintaining a Hold rating due to anticipated tenant move-outs affecting future funds from operations (FFO). Additionally, the company is making progress in its leasing efforts, particularly in New York City, and is advancing in the sale of non-income producing land parcels, which analysts anticipate will be accretive to earnings. Boston Properties is also actively marketing land parcels for sale, aiming to reduce leverage and improve FFO over the next few years, despite concerns about refinancing costs and the transaction market.

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