Scotiabank downgrades Healthpeak Properties stock on weak leasing

Scotiabank downgraded Healthpeak Properties Inc (DOC) to Sector Perform with a $19.00 price target, citing weak second-quarter leasing performance and growing laboratory credit risk concerns, which led to a reduction in 2026-2027 FFOPS/AFFOPS CAGR forecasts to +1%/-1% from +2%/+1%. This downgrade follows DOC's Q2 2025 earnings where EPS of $0.05 missed estimates by 21.88%, despite revenue slightly exceeding forecasts. While the stock appears historically discounted, Scotiabank sees minimal near-term catalysts, highlighting improved laboratory leasing as crucial for future performance.

Analysis

Healthpeak Properties (DOC) faces significant operational headwinds, underscored by a recent downgrade from Scotiabank to 'Sector Perform' with a lowered price target of $19.00. The downgrade is directly linked to weak second-quarter leasing performance and mounting credit risk in its laboratory portfolio, prompting Scotiabank to slash its 2026-2027 FFOPS and AFFOPS compound annual growth rate forecast to a range of +1% to -1%. This pessimistic outlook is substantiated by slow leasing progress at key campuses in South San Francisco and San Diego, which is delaying development NOI and impacting future earnings. The company's recent Q2 2025 financial results exacerbate these concerns, revealing a 21.88% miss on earnings per share ($0.05 reported vs. $0.064 expected), which overshadowed a marginal beat on revenue. While the stock's valuation appears historically discounted at a 10.5x FY26 AFFOPS multiple for what is considered a high-quality portfolio, the analysis highlights a clear absence of near-term positive catalysts, making a recovery in laboratory leasing the pivotal factor for future performance.

Key Decisions for Investors

• Given the analyst downgrade, negative earnings surprise, and lack of immediate catalysts, investors should exercise caution as the stock may remain under pressure until tangible improvements in leasing are demonstrated.
• The attractive 7.07% dividend yield must be weighed against the deteriorating operational outlook and lowered FFOPS growth forecasts, which could pose a risk to future payout sustainability.
• Prospective investors should consider delaying entry, despite the historically discounted valuation, and monitor leasing velocity and credit trends within the life sciences portfolio as key indicators for a potential turnaround.
• Focus on upcoming quarterly reports for any stabilization or improvement in leasing at the South San Francisco and San Diego campuses, as this is the primary metric flagged for a potential re-rating of the stock.