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Investing.com - Truist Securities downgraded Highwoods Properties Inc. (NYSE:HIW) from Buy to Hold on Wednesday, while maintaining a price target of $32.00. The $3.39 billion market cap REIT currently offers a substantial 6.4% dividend yield and has maintained dividend payments for 32 consecutive years, according to InvestingPro data.
The downgrade comes despite Highwoods being one of the best-performing office REIT stocks year-to-date, with a 2% gain compared to the VNQ’s 1% increase, according to Truist Securities. InvestingPro’s Fair Value analysis suggests the stock is slightly overvalued at current levels, with additional insights available in the comprehensive Pro Research Report.
The firm cited relatively low financial leverage for Highwoods compared to other office REITs, but noted this metric was merely average when measured against the 15 apartment and healthcare REITs in their coverage universe.
Truist Securities expressed concerns about Highwoods’ projected earnings growth rates and PEG ratios, which the firm views as less attractive than most apartment and healthcare REITs they cover.
The downgrade reflects Truist’s "relatively cautious view of the office sector overall," with the firm simultaneously downgrading Cousins Properties (NYSE:CUZ) to Hold as well, which had declined 3% year-to-date.
In other recent news, Highwoods Properties Inc. reported its first-quarter 2025 earnings, significantly surpassing analyst expectations with an earnings per share (EPS) of $0.91, compared to the forecasted $0.22. Despite a slight revenue shortfall, with actual revenue at $200.38 million against an expected $202.95 million, the company raised its 2025 funds from operations (FFO) outlook, reflecting confidence in continued growth. Highwoods’ strong performance in the Sunbelt markets contributed to these positive results, with the company also highlighting robust leasing activity. In the second quarter, Highwoods signed leases totaling over 750,000 square feet, including more than 300,000 square feet of new leases, signaling ongoing strength in their leasing activities. The company’s strategic focus on high-growth markets and the completion of key development projects have bolstered its market position. Additionally, Highwoods has been actively involved in asset recycling, with recent acquisitions and sales contributing to its growth strategy. Looking ahead, the company anticipates continued growth in occupancy and plans to sign approximately 300,000 square feet of new leases per quarter.
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