BMO Capital upgraded Hudson Pacific (HPP) to Outperform from Market Perform with a price target of $5, up from $4, which represents 66% potential upside. The shares are down 53% in the last 12 months as Hudson Pacific’s earnings have disappointed, driven by weaker office and studio results, with the market pricing in the possibility of insolvency, the analyst tells investors in a research note. However, the firm says Hudson has been exploring multiple avenues of cash flow generation, including debt raises and asset sales, which would alleviate near-term debt maturities through 2026. BMO believes the commercial mortgage-backed securities transaction “provides breathing room and valuation support.” The firm also highlights improving fundamentals in California for the company.
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