A recent announcement of a potential 100% tariff on foreign-made films by the Trump administration could impact content providers but may offer a positive shift for Hudson Pacific Properties (HPP, Financial). Wedbush highlights that the relocation of film production outside of the U.S. has posed challenges for HPP's studio operations over recent years. This new tariff could potentially encourage production to return to American soil, offering a possible advantage for the company.
Wedbush expects HPP shares to experience some activity in response, coinciding with the release of the company's first-quarter results scheduled for after the market closes on Wednesday. The firm maintains a Neutral rating on HPP with a price target set at $3.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 11 analysts, the average target price for Hudson Pacific Properties Inc (HPP, Financial) is $3.59 with a high estimate of $10.00 and a low estimate of $1.75. The average target implies an upside of 48.50% from the current price of $2.42. More detailed estimate data can be found on the Hudson Pacific Properties Inc (HPP) Forecast page.
Based on the consensus recommendation from 12 brokerage firms, Hudson Pacific Properties Inc's (HPP, Financial) average brokerage recommendation is currently 2.8, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Hudson Pacific Properties Inc (HPP, Financial) in one year is $5.52, suggesting a upside of 128.57% from the current price of $2.415. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Hudson Pacific Properties Inc (HPP) Summary page.
HPP Key Business Developments
Release Date: February 20, 2025
- Revenue: $209.7 million in Q4 2024, compared to $223.4 million in Q4 2023.
- FFO (Funds From Operations): $15.5 million or $0.11 per diluted share, compared to $19.6 million or $0.14 per diluted share a year ago.
- Specified Items Impact: $0.74 per diluted share in Q4 2024, compared to $0.05 per diluted share a year ago.
- Same-Store Cash NOI: $94.2 million, down from $106.3 million in Q4 2023.
- Office Leasing Activity: Over 2 million square feet of signed leases in 2024, with 1.2 million square feet of new leasing.
- Studio Revenue Increase: $2 million increase in Q4 2024 compared to the prior quarter.
- G&A Savings: Achieved approximately $4 million in savings compared to initial outlook.
- Asset Sales: Generated $94 million of gross proceeds over the last two quarters.
- Credit Facility Amendment: Adjusted definitions and ratios, with lender commitments now at $705 million.
- Liquidity: $418.3 million total liquidity, including $63.3 million of unrestricted cash.
- Debt Maturities: No debt maturities until November 2025.
- 2025 FFO Guidance: Expected to range from $0.07 to $0.11 per diluted share for Q1 2025.
- Same-Store Property Cash NOI Growth: Expected to be negative 12.5% to 30.5% for 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Office leasing activity increased by nearly 20% in 2024, with over 2 million square feet of signed leases, marking the highest level since 2019.
- Successful completion of two major development projects: Washington 1000 in Seattle and Sunset Glenoaks in Los Angeles.
- Achieved approximately $4 million in G&A savings through cost-cutting initiatives, with further savings anticipated in 2025.
- Positive net absorption in key markets like San Francisco and Silicon Valley, indicating resilience in West Coast office fundamentals.
- Increased venture funding in the Bay Area, particularly driven by AI interest, which is expected to boost office leasing demand.
Negative Points
- Q4 2024 revenue decreased to $209.7 million from $223.4 million in the previous year, primarily due to asset sales and tenant move-outs.
- FFO per diluted share decreased to $0.11 from $0.14 year-over-year, impacted by goodwill impairment and other specified items.
- Same-store cash NOI declined due to lower office occupancy, with a negative outlook for the first half of 2025.
- Leasing spreads were down, with GAAP and cash rent spreads lower by 6% and 9.9% respectively in the quarter.
- Challenges in the studio segment, including a goodwill impairment related to slower-than-expected recovery post-strike.
