Citi cuts Extra Space Storage target to $165 from $185

On Tuesday, Citi analysts revised their outlook on Extra Space Storage (NYSE:EXR), reducing the price target to $165 from the previous $185 while maintaining a Neutral rating on the stock. The adjustment comes as the analysts recalibrate their expectations for the company's future financial performance. According to InvestingPro data, Extra Space Storage currently trades at $152.14, with a P/E ratio of 39.85, indicating a relatively high earnings multiple.

The decision to lower the price target was based on a change in the multiple used to estimate the company's value, shifting from approximately 22.5 times to 20 times the projected 2025 core funds from operations (FFO). This new valuation is positioned below that of Public Storage (NYSE:PSA), a key competitor, but remains slightly above that of other peers in the industry. InvestingPro analysis suggests the stock is currently overvalued based on its proprietary Fair Value model.

The analysts explained their rationale, stating that the revision reflects an anticipation of subdued storage industry fundamentals in the near term. Despite the decrease in the price target, Citi has opted to keep their earnings estimate for Extra Space Storage unchanged.

The storage sector, in which Extra Space Storage operates, has been facing various challenges, leading analysts to adopt a cautious stance on the financial outlook for companies within this market.

Investors and market watchers will be keeping a close eye on Extra Space Storage's performance, as the company navigates through the forecasted muted sector conditions. The company's stock will continue to be analyzed against industry peers and broader market trends.

In other recent news, Extra Space Storage reported robust financial performance for the third quarter of 2024, with a significant increase in the midpoint of full-year funds from operations (FFO) guidance.

This was driven by solid store performance and growth initiatives, despite challenges faced by the sector. In addition, Extra Space Storage initiated a $1 billion commercial paper note program through its operating partnership, Extra Space Storage LP, intended for general corporate purposes.

The company also added 63 third-party managed stores in Q3, bringing the year-to-date total to 124. In terms of mergers, Extra Space Storage is expecting $100 million in synergies from its merger with Life Storage (NYSE:LSI) Inc., focusing on management, bridge loans, and procurement efficiencies.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.