Stifel Nocolaus said Highwood's competitors have gained on the real estate investment trust of late.
"Until recently HIW stood out due to its clean balance sheet, solid core operations, and successful development pipeline," Stifel Nocolaus wrote. "Now its immediate peer group has gain along all fronts and the premium valuation is no longer warranted."
Stifel Nocolaus has had a buy rating on Highwoods since the third quarter of last year.
Highwood's is the Triangle's biggest office landlord. It owns or has interests in about 35.2 million square feet, primarily in the Southeast.
The company is set to report third quarter earnings on Wednesday. Its stock opened at $29.16 this morning.