On Friday, Scotiabank updated its financial outlook on Extra Space Storage (NYSE:EXR) shares, increasing the price target to $159 from the former $140, while maintaining a Sector Underperform rating on the stock.
The adjustment reflects a revision of estimates due to a combination of weaker pricing in the second quarter, which was somewhat balanced by higher occupancy levels.
The firm also made slight revisions to its full-year 2024 same-store revenue (SSREV) estimates for both Extra Space Storage and Public Storage (NYSE:NYSE:PSA), now expecting a decrease of 0.1% for EXR and 0.3% for PSA.
These changes are in contrast to the previously anticipated slight increases. Consequently, this revision leads to a reduction in the full-year 2024 funds from operations per share (FFOPS) estimates by 0.6% for EXR and 0.9% for PSA.
In addition to the price target adjustment for Extra Space Storage, Scotiabank also raised its price target for Public Storage to $314, up from $289. This increase is attributed to an upward adjustment in the applied multiple—from 16.5x to 18.0x for Public Storage and from 16.5x to 19.0x for Extra Space Storage.
The analyst's commentary highlighted the application of a new methodology in setting the 2025 FFOPS multiple premium to REITs. The new targets will reflect a premium increase from in-line to +0.5x for Extra Space Storage and to +1.5x for Public Storage.
This is a change from the +1.5x and +2.5x ten-year average premium to REITs, respectively. These revised targets and estimates are part of Scotiabank's latest analysis and forecast adjustments for the companies.
In other recent news, Extra Space Storage Inc. has declared a quarterly dividend of $1.62 per share, exhibiting a commitment to providing value to its stockholders. The dividend will be distributed to shareholders of record as of the close of business on June 14, 2024.
In addition to this, the company's first quarter 2024 results demonstrate steady growth, with same-store pool occupancy reaching 93.2% and a 1% lift in same-store revenue performance.
This recent development also includes the addition of $164 million in new bridge loans and 72 net third-party managed stores. Extra Space Storage remains optimistic about its performance in the upcoming leasing season.
The company's first quarter of 2024 has set a positive tone for the year, with strategic revenue management and a confident outlook on occupancy and rate improvements.
Despite some market challenges, the company is prepared to navigate the leasing season with robust infrastructure and a clear focus on long-term growth. These are the latest developments for Extra Space Storage Inc.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.