Investing.com -- Mizuho upgraded Cousins Properties to Outperform and named it a top pick for fiscal 2026, saying the market has already priced in heavy pessimism about Sunbelt office demand while leasing trends and supply pressures are starting to improve in key markets such as Austin and Atlanta.
The broker set a new price target of $29 and said CUZ’s valuation sits well below historical averages despite what it sees as lower execution risk than peers.
Mizuho said Office REITs have lagged this year on macro worries, but the sub sector now trades at roughly 11 times FFO, a 45% discount to the broader REIT group.
It expects the sector to post limited earnings growth in FY26 as slower occupancy conversion, dilutive sales, refinancing costs and higher capital expenditure weigh on results. It forecasts Office FFO growth of about 1% next year compared with 4% for REITs overall.
Within the group, Mizuho said positioning and regional debates will drive volatility in FY26. It prefers East Coast landlords such as Vornado and Boston Properties and is Neutral on Kilroy and Hudson Pacific.
But it said recent underperformance in Sunbelt names has created an opening, making CUZ an attractive tactical rotation.
CUZ is down 18% this year versus REITs up 1% and now trades at about 8.5 times FFO, below its five year average of 11 times.
The broker said the stock’s current risk premium of about 420 basis points is also 60 basis points wider than pre pandemic levels, suggesting investors have already priced in significant risk.
Mizuho said fundamentals in CUZ’s core markets show signs of stabilisation. Austin posted negative absorption for three straight quarters, but availability fell slightly in the third quarter and sublease space shrank.
Leasing volume more than doubled from the prior quarter. Atlanta logged its first quarter of positive absorption in a year, with a 15% rise in leasing. Mizuho said construction pipelines in both markets have pulled back, reducing supply pressure.
The firm said CUZ faces less execution risk than peers as it targets 90% occupancy by late 2026, supported by a record leasing pipeline and low near term lease expirations. It also cited balance sheet flexibility, noting leverage of about 5 times compared with peers closer to 8 times.
Mizuho’s FY26 FFO estimate of $2.91 is in line with consensus and its FY27 forecast of $3.06 is slightly higher. The broker said its $29 target assumes a 10 times FFO multiple and an improving set up for Sunbelt office demand.
It highlighted risks including potential large tenant move outs, weaker market recoveries and broader macro pressure on REITs.
