Highwoods Properties heads into its Q2 earnings print today with a striking disconnect: short sellers have been piling in aggressively even as the stock has rallied hard enough to blow through most analyst price targets.
Short interest is the dominant story going into this print. It has climbed 57% over the past month to 9.5% of the free float — a material and fast-moving position that demands attention. The bulk of that build happened in late June, when shares short jumped from roughly 6.5 million to over 10 million in the span of a week. Days-to-cover runs at 6.8, meaning shorts would need nearly seven days of average volume to exit — a meaningful overhang. The borrow market remains loose, with availability at 260%, so there is no squeeze pressure yet. Cost to borrow is low at 0.54%, up around 14% on the week but still well within easy territory. Shorts are building, but they are doing so cheaply and without constraint.
Options positioning reinforces the bullish tilt that has driven the stock up 12.5% over the past month. The put/call ratio has collapsed to 0.17 — more than one standard deviation below its 20-day average of 0.25, and close to its 52-week low of 0.13. Call activity is dominating the options market. That is the opposite of what you would see if investors were hedging defensively into earnings. The divergence between options (confident) and short interest (skeptical) is the central tension in the setup.
The analyst community sits firmly in the bear camp on valuation, even after rushing to raise targets. Morgan Stanley lifted its target to $35 last week — the most aggressive upgrade — yet maintained an Equal-Weight rating. Mizuho moved to $30 from $25. Both moves came after the stock had already run to $33.64, trading above the consensus mean target of $29.56. The Street has been chasing the rally, not leading it. Bears point to a projected 5.4% FFO decline in 2025 and only a 4.2% recovery in 2026, plus rate sensitivity in HIW's urban Southern markets. Bulls counter with a blue-chip tenant base that includes government agencies, expectations for positive GAAP rent spreads, and a dividend yield above 5.8%. The EPS surprise factor score ranks in the 96th percentile — the company has a strong track record of beating estimates, which underpins the call-heavy options positioning.
Institutional ownership adds a noteworthy wrinkle. BlackRock added nearly 2.9 million shares in the quarter to June 30, lifting its stake to 15.9% of shares outstanding. That is a sizeable incremental commitment from the largest holder at a time when most analysts were still carrying targets well below the current price. The two most recent earnings prints showed modest, mixed reactions — a 2.5% gain on the day following the May result, and a 2.4% drop after April — suggesting the stock does not habitually make large moves on the number itself.
Today's print will test whether the fundamental case — FFO trajectory, leasing spreads, and occupancy trends across Raleigh, Nashville, and Atlanta — can justify a stock trading above every major analyst's price target, or whether the 57% surge in short interest over a single month turns out to be the smarter read.
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