With a market cap of $59.1 billion, Public Storage (PSA) is the largest owner and operator of self-storage facilities in the United States, offering month-to-month storage solutions for personal and business use. The Glendale, California-based company operates over 3,000 facilities across 40 states and holds a 35% stake in Shurgard Self Storage, which manages 281 facilities in Western Europe.
Shares of Public Storage have slightly outperformed the broader market over the past 52 weeks. PSA has risen 32.5% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 31%. However, in 2024, shares of PSA are up 10.7%, lagging behind SPX’s 25.2% gain on a YTD basis.
Focusing more closely, the self-storage facility REIT has outpaced the Real Estate Select Sector SPDR Fund’s (XLRE) 21.9% return over the past 52 weeks and a 10.1% YTD return.
Despite reporting better-than-expected Q3 revenue of $1.2 billion, shares of PSA fell over 2% the following day as core FFO per share of $4.20 missed the consensus estimate and declined 3% year-over-year. Additionally, the company experienced weaker same-store performance, with declines in realized annual rent per occupied square foot and occupancy rates, alongside rising expenses for property operations, maintenance, marketing, and interest. These operational challenges, combined with a same-store net operating income (NOI) decrease of 2.5% and a reduced NOI margin, raised concerns about declining efficiencies and near-term demand softness in the self-storage market.
For the current fiscal year, ending in December, PSA is expected to report an FFO per share of $16.73, reflecting a marginal year-over-year decline. The company’s earnings surprise history is mixed. It beat the consensus estimates in two of the last four quarters while missing on two other occasions.
Among the 19 analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on 10 “Strong Buy” ratings, eight “Holds,” and one “Strong Sell.”
This configuration is slightly more bullish than three months ago, with nine “Strong Buy” ratings on the stock.
On Nov. 12, BofA lowered Public Storage's price target to $354 and maintained a “Neutral” rating, citing Q3 results that align with expectations of limited near-term demand growth in the self-storage sector.
The mean price target of $346.24 represents a premium of just 2.6% to PSA’s current levels. The Street-high price target of $388, implies a potential upside of 14.9% from the current price.
