Wells Fargo upgrades Extra Space Storage stock to Overweight on improving rates

Investing.com - Wells Fargo upgraded Extra Space Storage (NYSE:EXR) from Equal Weight to Overweight and set a price target of $160.00. The company, with a market capitalization of $31.1 billion, has maintained dividend payments for 22 consecutive years and currently offers a 4.6% dividend yield.

The upgrade comes as Extra Space Storage has experienced underperformance year-to-date (-4.2%) and over the past month, creating what Wells Fargo describes as a favorable risk/reward setup for the self-storage company. The stock currently trades at a P/E ratio of 30.5x with a PEG ratio of 1.67x.

Wells Fargo highlighted that Extra Space Storage’s move-in rates have increased 1-2% over the past two months, while competitors have seen rates decline 3-5% during the same period.

The firm noted that Extra Space Storage’s industry-leading occupancy provides more room to push rates and early check-in revenue increases (ECRIs), with same-store growth expected to improve beginning in the fourth quarter of 2025.

Wells Fargo also pointed to valuation support, noting that Extra Space Storage is trading at approximately 3-4 times discount to historical levels and flat relative to Public Storage (NYSE:PSA), compared to its historical 1 times premium.

In other recent news, Extra Space Storage reported its second-quarter 2025 earnings, where the company exceeded earnings per share (EPS) expectations with a reported EPS of $1.18 compared to the forecast of $1.15. However, the company missed revenue projections, posting $841.62 million against an anticipated $844.76 million. Additionally, Extra Space Storage announced a third-quarter dividend of $1.62 per share, payable to stockholders at the end of September 2025. The company also priced an $800 million public offering in senior notes due in 2033, with the offering expected to close in early August 2025.

In analyst coverage, Goldman Sachs downgraded Extra Space Storage from Buy to Neutral, citing a slower growth outlook and projecting an average annual funds from operations (FFO) growth of 2.5% from 2025 through 2027. Truist Securities also adjusted its price target for Extra Space Storage to $150, maintaining a Hold rating, and revised its FFO estimates for 2025 and 2026 slightly downward. These developments highlight the company’s ongoing financial activities and analyst perspectives.

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