Last Update 06 Jan 26

Fair value Increased 0.45%

HPP: Gateway AI Office Demand And Reverse Split Will Support Future Upside

Analysts have trimmed their price targets on Hudson Pacific Properties, with the updated fair value edging to about US$20.67. They cite reduced revenue growth assumptions, a slightly higher profit margin outlook, and a higher future P/E multiple after sector wide REIT target resets.

Analyst Commentary

Bullish Takeaways

Bullish analysts are still willing to assign positive ratings even after cutting targets, suggesting they see room for upside relative to current pricing despite the lower fair value range.
The view that many REITs delivered Q3 2025 earnings and outlooks reflecting healthy operating conditions gives some support to the sector backdrop Hudson Pacific operates in.
Some research sees office REITs with exposure to traditional gateway markets as offering attractive risk and reward. Hudson Pacific’s presence in cities like San Francisco, New York City, Seattle and Boston fits that theme.
The modest adjustments to certain targets, such as a change from US$2.50 to US$2.40, point to fine tuning of assumptions rather than a wholesale shift in the long term thesis.

Bearish Takeaways

Several bearish analysts have lowered price targets in quick succession, from ranges like US$3.10 to US$2.60 and US$2.90 to US$1.90, which pulls down the implied valuation they are willing to underwrite.
Neutral and Hold ratings highlight hesitation around execution and growth, with some analysts preferring to watch how fundamentals and leasing trends evolve before taking a more positive stance.
The emphasis on artificial intelligence as a key theme for future office demand could mean Hudson Pacific has to prove its ability to capture this demand in gateway markets, rather than investors assuming it will automatically benefit.
Target reductions tied to broader REIT coverage resets suggest that sector wide factors, including macro and labor market concerns mentioned in research, may continue to weigh on sentiment and valuation multiples for office focused names like Hudson Pacific.

What's in the News

Hudson Pacific Properties filed Articles of Amendment in Maryland to implement a reverse stock split, adjust par value, and reduce authorized shares, reflecting multiple updates to its charter on November 26, 2025 (company filing).
The reverse stock split combined every seven issued and outstanding common shares into one share, effective at 5:00 p.m. Eastern Time on December 1, 2025, with fractional shares to be settled in cash based on the New York Stock Exchange closing price that day (company filing).
Immediately after the reverse split, the company adjusted the par value of common stock back to US$0.01 per share and reduced total authorized shares to 121,600,000, including 103,200,000 common shares and 18,400,000 preferred shares (company filing).
Hudson Pacific reported that from July 1, 2025 to September 30, 2025, it repurchased 0 shares for US$0, while cumulatively completing the repurchase of 9,352,285 shares for US$213 million under its February 25, 2016 buyback authorization (company disclosure).
The company updated full year 2025 guidance, indicating expected GAAP non cash revenue from straight line rent and above or below market rents in a range of US$3,000,000 to US$8,000,000 (company guidance).

Valuation Changes

Fair Value: The fair value estimate has risen slightly from US$20.58 to about US$20.67 per share.
Discount Rate: The discount rate remains unchanged at 12.5%, so the required return assumption is stable.
Revenue Growth: The revenue growth input shifts from about 4.22% growth to a 0.65% decline, indicating a more cautious view on future top line trends.
Net Profit Margin: The net profit margin assumption is essentially flat, moving marginally from 10.65% to 10.66%.
Future P/E: The future P/E multiple has increased from 20.52x to about 23.78x, which reflects a higher valuation multiple applied to earnings in the model.

Increased AI and tech sector leasing, along with studio demand from content creation, is boosting occupancy, revenue, and future margin potential.
Operational streamlining, balanced portfolio repositioning, and improved liquidity enhance earnings stability and support growth amid evolving workspace trends.
Concentration in tech-centric West Coast markets and weak office demand, combined with financial pressures and studio volatility, undermine stability and limit earnings growth potential.

Catalysts

About Hudson Pacific Properties

A real estate investment trust, or REIT, and the sole general partner of our operating partnership.What are the underlying business or industry changes driving this perspective?

Accelerating office leasing momentum, particularly driven by AI and tech sector expansion in West Coast markets, is resulting in rising tour activity, increasing average deal size, and a strong leasing pipeline; this trend should drive higher occupancy and ultimately top-line revenue growth as well as improved earnings visibility over the next several years.
Growing content creation demand from streaming services and the ramp-up in California film and television tax credits are leading to rising studio show counts, improving occupancy at core studio assets, and the potential for a return to meaningful studio NOI/EBITDA levels-providing both revenue diversification and a runway for margin improvement as studio utilization recovers.
Enhanced focus on cost containment, with ongoing G&A cuts and operational streamlining (notably in the Quixote studio business), is driving immediate margin improvement and reducing the breakeven occupancy threshold, with further upside as show counts and utilization improve.
The company has significantly strengthened its balance sheet, securing over $1 billion in liquidity, refinancing near-term maturities, and raising equity to deleverage, which reduces interest expense and supports future growth capital needs, further benefiting net margins and earnings stability.
Portfolio repositioning through the sale of non-core assets and ongoing investment in premier studio and office developments positions HPP to capitalize on rising demand for high-quality, amenity-rich, sustainable workspaces-catalyzing future rent growth and supporting resilient long-term cash flows.

Hudson Pacific Properties Earnings and Revenue Growth

Hudson Pacific Properties Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Hudson Pacific Properties's revenue will grow by 4.4% annually over the next 3 years.
Analysts are not forecasting that Hudson Pacific Properties will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Hudson Pacific Properties's profit margin will increase from -53.3% to the average US Office REITs industry of 10.7% in 3 years.
If Hudson Pacific Properties's profit margin were to converge on the industry average, you could expect earnings to reach $96.5 million (and earnings per share of $0.21) by about September 2028, up from $-422.8 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 22.3x on those 2028 earnings, up from -2.5x today. This future PE is lower than the current PE for the US Office REITs industry at 37.9x.
Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 12.32%, as per the Simply Wall St company report.

Hudson Pacific Properties Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Persistent shift towards remote and hybrid work is driving long-term reductions in traditional office demand, as evidenced by office occupancy rates still well below pre-pandemic levels (currently around 75%), putting pressure on leasing, achievable rents, and revenue.
Company's heavy geographic and asset concentration in West Coast tech and media markets heightens exposure to cyclical downturns, regional outmigration, and tech sector volatility, increasing the risk of revenue shortfalls and inconsistent net operating income.
Structural oversupply and weak absorption in key office markets remain an ongoing challenge, as indicated by declining trailing 12-month net effective rents (down 11% versus pre-pandemic), limiting rent growth and constraining earnings improvement.
Elevated leverage and reliance on asset sales and equity offerings to boost liquidity signal ongoing pressure on free cash flow, with dilutive impacts on earnings per share and increasing refinancing risk, especially if interest rates remain high.
Studio operations, despite some improvement, remain vulnerable to inconsistent production volumes and show counts; recovery to prior profitability levels is not guaranteed, and continued underperformance or weak occupancy would weigh on overall revenue and FFO growth.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $3.232 for Hudson Pacific Properties based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $5.0, and the most bearish reporting a price target of just $2.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $902.1 million, earnings will come to $96.5 million, and it would be trading on a PE ratio of 22.3x, assuming you use a discount rate of 12.3%.
Given the current share price of $2.81, the analyst price target of $3.23 is 13.1% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

Have other thoughts on Hudson Pacific Properties?

Create your own narrative on this stock, and estimate its Fair Value using our Valuator tool.

Create Narrative

How well do narratives help inform your perspective?

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

AI And Tech Expansion Will Revitalize West Coast Leasing