On Monday, Goldman Sachs adjusted its outlook on Public Storage (NYSE:PSA) shares, a prominent self-storage company, by increasing the price target to $345 from the previous $335 while maintaining a Buy rating on the stock. This revision follows the company's fourth-quarter earnings report and the subsequent guidance for 2024 during the earnings call.
In the earnings call, management detailed several factors, such as move-in rates, the Economic Cycle Research Institute's data (ECRI), seasonality, occupancy levels, and expectations for same-store revenue and expenses. They also discussed the supply and development aspects of the business. According to the analyst's evaluation, the management's insights suggest a stable same-store revenue growth for the year ahead.
Goldman Sachs anticipates that the stabilization in same-store revenue growth will likely lead to an expansion in the company's trading multiples. This, combined with external growth from development projects, is expected to result in an average Core Funds From Operations (Core FFO) growth of 3.8% annually from 2024 through 2026. Goldman's projections are slightly more optimistic than the market consensus, being 0.7% above the 2024 FactSet consensus.
"Internal growth should remain outstanding due to a combination of excellent fundamentals and the continued stabilization of recently purchased and developed properties," the analyst said.
Public Storage's guidance and the updated estimates have contributed to Goldman's positive outlook on the stock's future performance. The increase in the price target reflects confidence in the company's ability to grow and expand in the coming years.
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