2023-04-24 11:36:08 ET
Mizuho Securities upgraded Healthpeak Properties ( NYSE: PEAK ) to Buy in its review of life science lab REITs, as it views its overall risk-reward as positive.
"PEAK has derated materially during the last 12 months on growing concerns around its life science tenant base," said analyst Vikram Malhotra. "Our new deep-dive suggests its tenant base is strong from a cash runway perspective, and risks of credit issues are small and manageable."
Mizuho lowered its price target on Healthpeak ( PEAK ) to $25 from $29, implying 18.3% potential upside to its last close.
Malhotra said life science lab landlord fears are "overblown" as existing risks are manageable. Healthpeak ( PEAK ) and Alexandria Real Estate Equities ( ARE ) trade at 500 bps-700 bps larger than historical discounts to their healthcare peers.
"We acknowledge there is near-term pain, as we are likely to see potential consolidation among, or select bankruptcies of, biotech companies," said Malhotra.
However, he sees lab REITs as a "lower-beta way to play a volatile life sciences environment."
Mizuho reiterated its Buy stance on Alexandria ( ARE ), but slashed its PT to $145 from $180 (16.5% potential upside to its last close).
More on Lab REITs
Healthpeak Properties: Investment-Grade Rated Bargain
Healthpeak dowgraded at Scotiabank amid tougher life sciences outlook
Alexandria Real Estate: High Conviction Buy
Alexandria Real Estate: Dearly Loved But Fairly Punished
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Mizuho upgrades Healthpeak on positive risk-reward, calls lab REIT fears 'overblown'