Analysts at Jefferies have upgraded Highwoods Properites (HIW) to a buy rating, saying the Raleigh real estate investment trust should benefit from an improving jobs picture and the rolling over of leases that were signed during the recession.
Jefferies put a 12-month price target of $40 per share on the stock, up from $35 per share. Highwoods shares were trading at $34.50 this afternoon.
In addition to benefiting from an improving economy, Highwoods also should see increased acquisition and development opportunities, Jefferies said. The stock is also attractive because it offers a 5 percent dividend.
Many of the leases Highwoods signed in 2008 and 2008 were 5-year terms, Jefferies notes, meaning the company should benefit as those leases are renewed at higher rates in 2013 and 2014.
"We believe HIW stands to benefit the most out of its suburban peers given its high quality assets, clean balance sheet, and solid management team," the analysts wrote.
"While some challenges remain, particularly the backfill of the AT&T and PwC space in Atlanta and Tampa, respectively, we believe that positive outcomes for both of these spaces could be a significant positive catalyst for HIW stock."