On Monday, BofA Securities adjusted its stance on Public Storage (NYSE: NYSE:PSA) stock, moving its rating from Buy to Neutral. The firm also set a new price target for the storage unit company's shares at $318.00. The downgrade reflects several concerns about the company's near-term prospects.
The analyst from BofA Securities cited a diminishing expectation for an uptick in storage demand, which could extend through the peak leasing season of 2025.
Additionally, Public Storage's ability to command higher prices with new customers is seen as weakening. These factors, combined with the current valuation of the company's shares, suggest a balanced risk-reward scenario.
Public Storage's stock is currently trading at a 5.6% capitalization rate, with a forecasted same-store net operating income (NOI) growth of -2.5% by 2025, according to BofA Securities' estimates.
The firm indicated that within the short lease real estate investment trust (REIT) sector, residential REITs might present a more attractive balance of valuation and growth potential.
The analyst's comments highlight several key metrics that informed the decision to alter the investment rating. The change in outlook for Public Storage comes amidst a challenging environment for companies in the storage sector, as they navigate customer demand and pricing dynamics.
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